Siddiqui v Karl Thomas and M Irfan Pty Ltd trading as Mowbray Physiotherapy Services (No 2)
[2023] FedCFamC2G 849
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Siddiqui v Karl Thomas and M Irfan Pty Ltd trading as Mowbray Physiotherapy Services (No 2) [2023] FedCFamC2G 849
File number: LNG 68 of 2021 Judgment of: JUDGE TAGLIERI Date of judgment: 22 September 2023 Catchwords: INDUSTRIAL LAW – penalties – Court having found 9 contraventions by a corporation – disregard of Award and legislation – misunderstanding, ignorance and lack of attention to establishment of the employment relationship - director involved in all contraventions. Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 539(3), 546Fair Work Regulations 2009 (Cth), pt 4.1, regs 3.31, 3.32, 3.33, 3.34, 3.35, 3.42
Health Professionals and Support Services Award 2020
cl 24 of the AwardCases cited: Australasian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263
Fair Work Ombudsman v Openica Logistics Pty Ltd [2016] FCCA 159
Fair Work Ombudsman v Yenida Pty Ltd & Anor [2017] FCCA 2299
Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338
Workplace Ombudsman v Saya Cleaning [2009] FMCA 38
Division: Division 2 General Federal Law Number of paragraphs: 56 Date of last submission: 29 August 2023 Place: Hobart Counsel for the Applicant: Mr Lettau Solicitor for the Applicant: Hall Payne Lawyers Counsel for the Respondents: Mr Pym Solicitor for the Respondents: Barry Nilsson Lawyers ORDERS
LNG 68 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FATIMA SHOAIB SIDDIQUI
Applicant
AND: KARL THOMAS & M. IRFAN PTY LTD TRADING AS MOWBRAY PHYSIOTHERAPY SERVICES
First Respondent
MUHAMMAD IRFAN
Second Respondent
ORDER MADE BY:
JUDGE TAGLIERI
DATE OF ORDER:
22 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Within 30 days, the Respondents pay the sum of $4,376.30 to the Applicant in compensation for unpaid overtime.
2.Within 60 days, the First Respondent pay pecuniary penalties fixed in the amount of $8,000 to the to the Consolidated Revenue Fund of the Commonwealth for the contraventions referred to in the Court’s orders of 17 July 2023.
3.Within 60 days, the Second Respondent pay pecuniary penalties fixed in the amount of $2,000 to the Applicant for the contraventions referred to in the Court’s orders of 17 July 2023.
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 TAGLIERI
By judgment delivered on 17 July 2023 (“the liability judgment”) in these proceedings, the Court made liability determinations and consequential declaratory orders as follows:[1]
THE COURT DECLARES THAT:
A.The Respondents contravened cl 24 of the Health Professionals and Support Services Award 2020 (“the Award”) in that they did not pay the Applicant overtime where she worked in excess of her ordinary hours.
B.The Respondents contravened cl 3 of the Award in that they did not ensure that copies of the Award and the National Employment Standards were made available to the Applicant.
C.The Respondents contravened s 125 of the Fair Work Act 2009 (Cth) (“the Act”) in that they did not give a copy of the Fair Work Information Statement to the Applicant.
D. The Respondents contravened reg 3.42 of the Fair Work Regulations 2009 (Cth) (“the Regulations”) in that they failed to provide the Applicant’s employee records to her upon request.
E. The Respondents contravened regs 3.31, 3.32, 3.33, 3.34 and 3.35 of the Regulations in that they failed to make and keep employee records in respect of the Applicant.
[1] Orders made 17 July 2023.
THE COURT ORDERS THAT:
1.The Court will hear further submissions at a time and date to be fixed to enable final orders to be made by way of remedy or penalty in relation to the declarations referred to at A to E of these Orders.
2.Within 14 days of the date of these Orders, the parties are to file and serve written submissions, inclusive of calculations of the quantum of overtime payable and penalty.
3.If the parties consent to determination of quantum of overtime payable and penalty being heard in Chambers on the papers, they submit a joint minute to that effect to Chambers within 21 days following the expiration of time in Order 2 of these Orders.
The parties were then directed to file written submissions concerning consequential orders that should be made in relation to the relief sought by the Applicant. The submissions were provided to Chambers by email, dated 28 July 2023 for the Applicant and 25 July 2023 for the Respondent. The Applicant also provided reply submissions regarding the application of section 546(3) of the Fair Work Act 2009 (Cth) (“the Act”), dated 23 August 2023.
Broadly speaking, the Applicant seeks:
·Payment of the sum of $4,376.30 by way of overtime found to be owing; and
·Imposition of pecuniary penalties, to be paid to her personally for various contraventions of the Act and the Fair Work Regulations 2009 (Cth) (“the Regulations”) made under the Act, and for contravention of the Health Professionals and Support Services Award 2020 (“the Award”).
The Court considered the written submissions of the parties. As those submissions contained assertions of fact which were not the subject of evidence before the Court, I intended to make directions in relation to filing of affidavit evidence upon which each party sought to rely. However, the parties advised the Court, by consent, that it should proceed to make final orders on the basis of attributing weight as it saw fit to the relevant contentions of fact which were not subject of evidence.[2]
[2] By email to Chambers dated 30 August 2023.
OVERTIME TO BE PAID
The Applicant contends that the sum of $4,376.30 is payable by way of overtime based on findings in the liability judgment. The Respondents concede that if overtime calculations made by the Applicant and annexed to submissions dated 28 July 2023 are to be used, the overtime payable is the sum of $4,376.30. However, they assert that because of the finding at [220] of the liability judgment, the Applicant was not required to work during meal breaks and so the duration of meal breaks should be deducted for the purpose of accurate calculation of the overtime payable.
The finding at [220] of the liability judgement was:
I do not accept that the Applicant was commonly assigned to work during meal breaks. …[emphasis added]
Other reasons in the liability judgment demonstrate that the Court accepted that the Applicant at times worked part of the usually assigned meal breaks, because the unchallenged evidence before the Court was that she ran over time with patients and needed assistance with clinical skills.[3]
[3] The liability judgment at [220].
As the Applicant’s and the Respondents’ records were found to be incomplete or inaccurate,[4] they do not reflect precisely when meal breaks were taken and for how long. In such circumstances, the record of hours found worked due to the reverse onus must apply.[5] As such, the Applicant’s calculations must be accepted and, accordingly, there will be an order that the sum of $4,376.30 be paid to the Applicant by the Respondents within 30 days.
[4] The liability judgment at [185].
[5] The liability judgment at [188].
ASSESSMENT OF PENALTIES TO BE IMPOSED
The parties’ submissions demonstrate that there was no dispute in relation to the legal principles applicable to the approach the Court must take in assessing and imposing penalties.[6]
[6] Applicant’s Outline of Submissions on Penalty & Overtime dated 28 July 2023 at [14]; Respondents’ Outline of Submissions on Overtime Calculations and Penalties dated 25 July 2023 at [5].
The Applicant emphasises various principles and authorities which support the Court imposing higher penalties, while the Respondents emphasise principles and authorities which suggest a more moderate approach in particular circumstances.
While there is some merit in the competing submissions made by both parties, it is the applicability of the factual circumstances of this case to the examples and principles upon which the parties relied which is in issue.
Ultimately, as the imposition of penalties involves a discretionary exercise based on all the circumstances of the case as found by the Court, I do not wholeheartedly and uncritically accept the submissions made by either party. Further, the weight to be attributed to the submissions not established by evidence has explicitly been left to the Court to assess as it sees fit.
Step 1: identifying the contraventions
The contraventions by the Respondents are those set out at A to E inclusive of the Court’s declaratory orders of 17 July 2023, as noted at [1] of these reasons. Both Respondents were involved in the contraventions.
Step 2 : single course of conduct
While the First Respondent is strictly a separate corporate entity distinct from the Second Respondent, it is abundantly clear from the evidence that:
(a)The First Respondent ultimately acted through the Second Respondent’s decisions, actions and mandate;
(b)Mrs Irfan was at all times acting in accordance with the Second Respondent’s directive when she was involved in reviewing hours of work; and
(c)In effect, the First Respondent was simply a convenient entity through which the Second Respondent carried out his physiotherapy business.
Accordingly, when the First Respondent contravened the Award and Regulations, it only did so due to the actions or inactions of the Second Respondent as the directing mind of the business. The Second Respondent’s evidence is that at relevant times he was the sole owner and director of the First Respondent.[7] Mrs Irfan was a mere employee at relevant times and did not become a director of the First Respondent until after the contraventions took place.[8]
[7] Affidavit of the Second Respondent filed 3 October 2022 at [5].
[8] Affidavit of Shehnila Irfan filed 3 October 2023 at [1].
For all intents and purposes, the contraventions were because of the Second Respondent’s conduct alone. It was the Second Respondent’s course of conduct which should be penalised, however the Act expressly provides for separate penalties in cases of a corporate employer and the knowing involvement of a director in the contraventions.
Although not directly on point, I find the guidance in the reasoning at [34] to [39] in Fair Work Ombudsman v Openica Logistics Pty Ltd [2016] FCCA 159 compelling, and I decline to impose a single penalty for the contraventions by each Respondent, although I have the discretion to do so. However, the matters at [15] and [16] of these reasons are matters to be properly taken into account in assessing the quantum of the penalties and engaging in the subsequent steps required for assessment of penalties.
Although the First Respondent was technically the employer, the facts of this case are such that when imposing separate penalties for the contraventions, care must be taken not to excessively penalise for what was in effect the action of one person.
The above conclusions do not mean that the Respondents engaged in a single course of conduct in respect of each contravention. The contraventions of cl 24 of the Award arose as a consequence of what the Court accepts was a likely genuine misunderstanding or ignorance on the Second Respondent’s part about what was permissible about salary packaging. The unchallenged evidence was that he had sought legal advice from a lawyer at the Tasmanian Chamber of Commerce and Industry in relation to the contract of employment for the Applicant. Although the Applicant’s counsel asks that the Court not accept this to be honest evidence, I do accept it because the evidence was not challenged. The other contraventions arose due to separate conduct which was the subject of other factual findings and the First Respondent had a distinct obligation to comply.
Step 3: grouped breaches
Contravention A
As a consequence of the Second Respondent’s misunderstanding or ignorance and because he did not check the terms of the Award, the First and Second Respondent failed to make correct overtime payments by operating on the incorrect assumption that they could average the hours worked by the Applicant.
Although each Respondent had an obligation to be aware of the terms of the Award, their misunderstanding or ignorance was in common and this needs to be taken into account. I accept that there are entirely common elements in the breach of cl 24 of the Award by each Respondent, but each Respondent either committed or was involved in the contravention in their own right.
In respect of contraventions referred to at B and C of the Court’s declaratory orders of 17 July 2023, the same reasoning above applies. The failure on the part of each Respondent to provide copies of the Award, the National Employment Standards and Fair Work Information Statement not only deprived the Applicant of the opportunity to understand and know about her lawful employment entitlements, but contributed to the Respondents’ ignorance about what overtime they should have been paying, given the hours the Applicant was found to have worked.
If the Respondents’ had possession of the documents referred to at [22] of these reasons and considered them properly, they likely would have avoided the overtime claims against them. The purpose of the provisions that establish these contraventions are similar and I consider that each Respondent separately committed the contraventions which have some common elements and objects in the context of the claims in which the Applicant was successful.
Contraventions B and C
I consider that contraventions B and C should be grouped together, and penalties collectively imposed for each Respondent. This is because the objective of Cl 3 of the Award is similar to the obligation under s.125 of the Act, being to inform employees about their lawful entitlements.
Contraventions D and E
Concerning the contraventions referred to in declaratory orders D and E, the failure to create and maintain records of the Applicant’s hours was part and parcel of the obligations created by regs 3.31, 3.32, 3.33, 3.34 and 3.35 of the Regulations. Contraventions of these collective regulations meant that the Respondents’ record of hours were found not to have been accurately created and maintained as required.
Due to the failures referred to at [25] of these reasons, the contravention of reg 3.42 of the Regulations occurred, because the Respondents did not have the required records to provide to the Applicant when she requested them. The former failures led to the latter, and each Respondent was commonly involved in the contraventions for the reasons earlier given. Accordingly, it is appropriate to group Contraventions D and E.
Step 4: assessing the appropriate penalty for the breaches
As I have found each Respondent responsible for the contraventions, it is relevant to ensure that the quantum of the penalties imposed proportionately reflect the Applicant’s loss, which is confined to a modest underpayment of overtime.
While I accept that the Respondents were complicit in the contraventions, it is relevant that the evidence establishes that the Applicant’s employer is small, employing two or three physiotherapists and three administrative staff, all of whom work alongside the principal physiotherapist. This is conceded in the Applicant’s submissions,[9] and I do not ignore the force of the additional submission that the penalties need to be meaningful as a deterrent.
[9] At [40].
I reject the written submissions of the Applicant that the conduct was aggravated because of the acts of the Second Respondent.[10] More likely, the conduct occurred due to ignorance and lack of attention given my reasoning at [22] and [23] of these reasons. It is also relevant and I take into account that all administrative employees gave evidence in the proceedings and there was no suggestion of widespread grievance or ongoing contraventions. Therefore, I reject the submission at [35] of the Applicant’s written submissions.
[10] Applicant’s written submissions at [34].
As there is no evidence about the profitability or viability of the Respondents, I consider no weight should be attributed to this factor on its own. However, I have on the evidence been satisfied that the First Respondent, primarily through the profession and endeavours of the Second Respondent, provides allied health services to patients in Launceston and employs a small team. The business cannot by any measure, in my view, be inferred to be exceedingly profitable as distinct from some public, nationally or internationally operating corporations.
The Court rejects that the Respondents have not demonstrated any contrition. The Second Respondent frankly admitted that he was unaware that he could not average the Applicant’s hours and he had based his knowledge on what had occurred with a prior employee. Further, it is relevant that the overtime claim only succeeded because of a deemed acceptance of the Applicant’s record, but the Court did not consider her record entirely accurate either. The defence of the claims was forceful by the Second Respondent in relation to the Applicant’s allegations of adverse action and coercion. Noting the Court’s rejection of the allegations, I do not place any weight on the Applicant’s written submissions at [38] and [39].
In addition, it is unsurprising that the Respondents did not offer an apology given the “falling out” between the parties and the finding that the parties held different expectations about the employment relationship.
There is simply no evidence to support the suggestion at [38(d)] to [38(g)] of the Applicant’s submissions that the Respondents engaged in similar or widespread contraventions, and so the Court is unwilling to draw such inference. There may have been some evidence about the Second Respondent’s interactions with the Australian Health Practitioner Regulation Agency in relation to another employee, but that is not relevant to the contraventions found to have occurred in this case.
The parties’ submissions conveyed some agreement about the maximum penalties available pursuant to the Act,[11] but the assertion that the maximum for the First Respondent, a corporation, is 600 penalty units is presumably a typographical error.
[11] Applicant’s submissions at [21] and [22]; Respondents’ submissions at [22] and [23].
Section 546 of the Act is clear and states that the maximum penalty for a corporation is 5 times that for an individual. The maximum penalty available for the Second Respondent as an individual is 60 penalty units for each contravention. Consequently, the maximum penalty available for the Second Respondent is 300 penalty units for each contravention.
There were opposing submissions about what the available penalty was for contraventions of the Regulations found to have occurred pursuant to the liability judgment. Declarations D and E relate to contraventions of regs 3.31, 3.32, 3.33, 3.34, 3.35 and 3.42 of the Regulations. Despite that submitted, the Regulations clearly provide maximum penalties for breach of each of the Regulations as they constitute civil remedies for which an employee can apply in Part 4.1 of the Regulations and contemplated by the core statutory provision in s 539(3) of the Act. For each contravention, the maximum penalty on application by an employee is 20 units.
The Respondents’ contraventions of regs 3.31, 3.32, 3.33, 3.34 and 3.35 arose from the same course of conduct,[12] that is, their failure to make and keep employee records. I find it is appropriate to treat them as a single breach and also group them with contravention D, relating to failure to provide the Applicant with her employee record. This is because contravention D only occurred because the Respondents had not maintained an accurate employee record as by virtue of Contravention E, not because they had refused or failed to provide what records they could.
[12] Contravention D
The value of a penalty unit is derived from s 4AA of the Crimes Act 1914 (Cth),[13] and at the time of the contraventions was $222.
[13] Section 12 of the Act.
In view of the statutory provisions referred to above, the maximum penalties available in each instance if the contraventions are for a serious contravention are:
Each of Contraventions A, B, C: First Respondent - $66,600[14] Second Respondent - $13,320 Each of Contravention D, E First Respondent - $22,200[15] Second Respondent - $4,400[16] [14] Being five times that for an individual by virtue of s 546 of the Act.
[15] Being five times that for an individual by virtue of s 546 of the Act.
[16] At [37] of these reasons.
Step 5: the totality principle
I am not satisfied that the Respondents set out on a course to deliberately take advantage of the Applicant. The evidence of the Second Respondent was persuasive that he went out of his way to assist the Applicant as a recent arrival to Australia who had not undertaken any work in her professional sphere. The evidence of the Applicant herself corroborated this to a degree.[17]
[17] Affidavit of the Applicant filed 25 August 2022 at [4] to [17].
I have effectively found in the liability judgment that misunderstanding, ignorance and lack of attention to establishment of the employment relationship were at the heart of the claims that succeeded.
The Applicant failed convincingly in the larger aspects of her claim relating to adverse action and coercion, and the length of the proceedings and costs the parties thus had to incur were disproportionate to what ought to have been the case. I had raised concerns about this to no avail during the hearing, given what it appeared would be the value of the overtime claim.
The facts of this case are in stark contrast to circumstances where corporations employing numerous employees prioritise making profits over their obligations to comply with the Act or Regulations, or where they fail to pay multiple employees according to the law.[18] The contraventions involved a single employee over a short period and did not involve malice or intent.
[18] Fair Work Ombudsman v Yenida Pty Ltd & Anor [2017] FCCA 2299.
Although the Applicant’s submissions place emphasis on an allegation that the Applicant was a vulnerable person of whom the Respondents took advantage, I do not accept that to be the case noting the findings at [82] of the liability judgment.
Essentially, the contraventions occurred because of the matters referred to at [42] of these reasons, along with poor management, administration and record keeping.
The fundamental purpose of imposing pecuniary penalties is deterrence, and I accept the Applicant’s submissions as to this in principle.[19] However, if the Court approached the imposition of penalties in the manner submitted to by the Applicant at [50] of her written submissions, the penalties would be in the region approaching $540,000 by the First Respondent and about $54,000 by the Second Respondent.
[19] Applicant’s written submissions at [41] to [44].
The approach impressed by the Applicant ignores the findings I have made about a single course of conduct and common elements in a number of the separate contraventions. It also is excessive to that which is required in all the circumstances to achieve the need for general and specific deterrence, and it is disproportionate to the circumstances of this case when compared to the worst or most extreme cases.
The Applicant’s counsel referred to the decision in Workplace Ombudsman v Saya Cleaning [2009] FMCA 38, and it is notable that the facts of that case involved deliberate contravention relating to two employees. Likewise, the decision in Australasian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263to which I was referred involved a far more serious contravention. Although the contraventions were similar, they involved underpayment of about three times more, the contraventions occurred over a three year period, and the contraventions were found to be deliberate.
I accept that it is relevant that the penalty rates due for overtime worked were over a short period. While the Respondents’ contraventions in relation to record keeping caused some of the dispute which was subject to these proceedings, the short-comings have indeed worked to the advantage of the Applicant. Further, the contravention relating to r 3.42 of the Regulations was partial as some records were provided to the Applicant and she also created her own.
In my view, the submissions on behalf of the Applicant seek imposition of penalty way beyond that which can be proportionately and legitimately justified given all the circumstances of this case.
I largely, but not completely, prefer the submissions on behalf of the Respondents at paragraphs [46] to [53] of their written submissions. I do not, however, accept that the Respondents are in poor financial circumstances and that a fair and proportionate approach to penalty imposition would put their business in jeopardy. There is simply no evidence upon which I could accept this to be the case.
On the basis of the approach, I have taken to single and grouped contraventions described in my reasons, the contraventions reflect about 10 per cent of the worst-case penalties and so I provisionally assess the penalties as follows:
·Contravention A: the First Respondent $6,660 and Second Respondent $1,332;
·Contravention B & C: the First Respondent $2,200 and Second Respondent $440; and
·Contravention D & E: the First Respondent $2,200 and Second Respondent $440.
In total, the assessment above results in payment required by the First Respondent of $11,060 and by the Second Respondent of $2,212 for pecuniary penalties, However, in stepping back to assess this outcome relative to the totality principle, I consider this is somewhat oppressive because of the factors referred to at [40] to [43] of these reasons. Accordingly, I apply a modest discount to the penalty to be paid by the First Respondent, and the Court will make orders as follows:
·The First Respondent pay pecuniary penalties totalling $8,000 within 60 days; and
·The Second Respondent pay pecuniary penalties of $2,000 within 60 days.
Finally, the issue of whether the penalties ought to be paid to the Applicant must be determined. I have directed myself according to the authority of Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338 (“Sayed”) from [72] to [94].
It is true that the Applicant had to prosecute her claims and some have been established, but not all were established and the entitlement to compensation recovered is extremely modest. The hearing did extend for a longer period because of the unsuccessful claims, and both parties are bearing the adverse effect of having to pay legal costs in respect of the extended hearing.
I do not have any evidence about the parties’ respective legal costs, but can infer that they would be significant for both. If all the penalties were paid to the Applicant, this would be disproportionate to the modest claim which succeeded, while the Respondents remain burdened by the additional costs caused by the unsuccessful claims. In these circumstances, I consider that the penalty payable by the Second Respondent should be paid to the Applicant directly, but the penalty payable by the First Respondent should be paid to the Commonwealth to serve and emphasise the broader public interest purposes discussed by Mortimer J in Sayed at [76].
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 22 September 2023
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