Stuart v Toni (No 2)
[2021] FCCA 2157
•23 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Stuart v Toni (No 2) [2021] FCCA 2157
File number(s): BRG 231 of 2019 Judgment of: JUDGE JARRETT Date of judgment: 23 August 2021 Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – assessing penalty.
INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – particular cases.
Legislation: Fair Work Act 2009 (Cth) ss 351, 351(1), 357, 357(1), 536, 536(1), 537(1), 550(1) Cases cited: CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Dafallah v Fair Work Commission (2014) 225 FCR 559
Fair Work Ombudsman v Hess [2021] FCCA 1883
McIlwain v Ramsey Food Packaging Pty Ltd (No. 4) (2006) 158 IR 181
Number of paragraphs: 29 Date of last submission/s: 23 August 2021 Date of hearing: 23 August 2021 Place: Brisbane Solicitor for the Applicant: Legal Aid Queensland Counsel for the Respondents: Mr O’Brien Solicitor for the Respondents: Bell Legal Group ORDERS
BRG 231 of 2019 BETWEEN: JESSICA STUART
Applicant
AND: JOHN TONI
First Respondent
LUKE FARRELL
Second Respondent
BRITTANY SALYER
Third Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
23 AUGUST 2021
THE COURT ORDERS THAT:
1.Within 28 (twenty-eight) days of the date of this order, the first respondent pay a pecuniary penalty to the applicant, pursuant to s.546(1) of the Fair Work Act 2009 (Cth) in the total amount of $9,000 which is made up of:
(a)a penalty of $5,000 in respect of the first respondent’s contravention of s 351(1) of the Fair Work Act 2009 (Cth);
(b)a penalty of $3,000.00 in respect of the first respondent’s contravention of s.357(1) of the Fair Work Act 2009 (Cth); and
(c)a penalty of $1,000.00 in respect of the first respondent’s contravention of s.536(1) of the Fair Work Act 2009 (Cth).
2.Within 28 (twenty-eight) days of the date of this order, the second respondent pay a pecuniary penalty to the applicant, pursuant to s.546(1) of the Fair Work Act 2009 (Cth), being a penalty of $5,000 in respect of the contravention of s.351(1) of the Fair Work Act 2009 (Cth).
3.Within 28 (twenty-eight) days of the date of this order, the third respondent pay a pecuniary penalty to the applicant, pursuant to s.546(1) of the Fair Work Act 2009 (Cth) in the total amount of $1,500.00 which is made up of:
(a)a penalty of $750.00 in respect of the first contravention of s 351(1) of the Fair Work Act 2009 (Cth); and
(b)a penalty of $750.00 in respect of the second contravention of s 351(1) of the Fair Work Act 2009 (Cth); and
(c)no penalty in respect of the contravention of s.536(1) of the Fair Work Act 2009 (Cth).
REASONS FOR JUDGMENT
JUDGE JARRETT:
This is an application for the imposition of pecuniary penalties consequent upon some findings by me that the respondents contravened the Fair Work Act 2009 (Cth) in certain respects. I delivered some reasons and orders for those findings earlier this year on 5 July, 2021. By those reasons I found that the first respondent - who had contravened the Fair Work Act because the applicant had been dismissed from the first respondent’s employment because of her pregnancy and that was a contravention of s. 351(1) of the Act – I found that the first respondent contravened s. 357(1) of the Act on two occasions because in respect of the two contracts of employment that the applicant was asked to enter into with the respondent, the first respondent misrepresented to the applicant the nature of the engagement.
It was represented to be the engagement of an independent contractor. I found that, ultimately, that the relationship between the applicant and the first respondent was that of employer and employee. The fourth contravention was of s. 536(1) of the Fair Work Act. That is the section that requires an employer to give to an employee a payslip each time the employee receives some wages. The second and third respondents were joined to the proceedings as accessories and subject to one correction that will have made to the declaratory relief that I granted on 5 July, I found that the second respondent was involved in the contraventions for the purposes of s. 550(1) of the Fair Work Act. He was involved in the first and fourth contraventions that I have identified and the third respondent was involved, for the purposes of s. 550(1) of the Fair Work Act, in the second, third and fourth contraventions.
The purpose of the imposition of pecuniary penalties is well known. Penalties are imposed for the purposes of marking the Court’s disapproval and that of the public of contravening conduct. The whole purpose of pecuniary penalties is to deter those who might determine to contravene the workplace laws of this country. Deterrence, specific and general, is the principal and only objective of pecuniary penalties under the Fair Work Act. So says both the High Court of Australia and the Federal Court of Australia in cases like the Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 and CFMMEU v ABCC (2018) 264 FCR 155.
The pecuniary penalties must be set at a level that would be likely to act as a deterrent to similar contraventions by likeminded persons and it must have the necessary sting or burden to secure the specific and general deterrent effects that is the raison d’etre of its imposition.
Here, the respondents argue that this is an appropriate case for there to be the imposition of no penalty and there are authorities referred to in the submissions helpfully provided by counsel for the respondents to support that argument. But I cannot accept those submissions. This is not a case where no penalty is appropriate. The evidence that I heard at the trial in respect of the contracting arrangements between the first respondent and the applicant was consistent with there being a particular business model operated by the first respondent, that is, those performing work for the first respondent and the applicant here, in particular, were designated as independent contractors when, in truth, she was not.
That is a business model, no doubt, designed to carry certain benefits for the employer. It is not to say some benefits do not flow to employees through that arrangement. But in this particular case none were identified. It is a significant matter because contracting arrangements such as this have the effect of undermining the safety net of entitlements provided for employees in the Fair Work Act. Sham contracting arrangements tend to undermine the system of industrial relations set out and established by the Fair Work Act. So I do not think I can impose no penalty. I certainly cannot impose no penalty for the breach of s. 351 of the Act either. That is a significant matter. People – women – are entitled to be protected from the type of discrimination that I found occurred here. They are entitled to know that their employment is safe in the event that they become pregnant. That is the purpose of those provisions of the Fair Work Act.
It has been said on many occasions by other judges of this court and by me in recent times that the provision of payslips to employees is important. The provision of a payslip allows an employee to understand the basis upon which an employee has been paid, how wages have been calculated and it permits the employee to make inquiries and to follow up those inquiries about pay related issues. Moreover, it permits a regulator such as the Fair Work Ombudsman in an appropriate case to make relevant investigations. In terms of the payslip contravention here, this case is a little different to the usual in the sense that the first respondent, as I indicated, has a particular business model. I will come to that issue in a little more detail shortly. But for present purposes it is sufficient to observe that if the business model was one which withstood scrutiny then there would have been no obligation to provide payslips.
And so this is not a case, I think, where there is a person who is avowedly an employer but who has for one reason or another not complied with their statutory obligations to provide payslips. For an example of that see the recent decision I delivered in Fair Work Ombudsman v Hess [2021] FCCA 1883. This is a different case. A different type of case.
I have identified the contraventions already. There are numerous contraventions of s. 536 – the payslip contravention. But the first respondent has the benefit of s. 557(1) of the Fair Work Act. That section applies to contraventions of s. 536(1) and so I should treat that those mutliple contraventions as one.
The other contraventions – the two contraventions of s. 357 do not attract the operation of s. 550(1) of the Act. But there is, of course, a principle that operates that means that where multiple contraventions of the same obligation are committed by the same person in an identifiable course of conduct, that person ought not be punished twice for the same offending behaviour. Ordinarily, one would look to see what the evidence says about the decisions that were made that lead to the various incidents that are said to represent multiple contraventions of a single obligation to determine whether it truly is a course of conduct so as to attract the operation of the principle.
Here, I have made reference to the the first respondent’s business model already and in that sense it might be said that the misrepresentations that occurred when the first contract was signed and the misrepresentations that occurred when the second contract were signed were part of a course of conduct by the first respondent. I think that is correct. I think it is a course of conduct committed by the same person, the first respondent, through his agents to the same end. He has a business model that he was employing which meant, presumably, that – and I am prepared to infer – that a particular decision was made by him at some point to operate his business in that way such that each time the occasion arose for the engagement of somebody, like the applicant here, that decision was implemented through a provision of a contract in the terms that were at issue before me. That is a very long-winded way of saying that in respect of the two contraventions of s. 351 I think I should deal with them separately but impose only one penalty for both of them.
There is but one contravention of s. 351.
I do not understand the respondent’s submissions to suggest that I should deal with the disparate contraventions together as one contravention of the Act. That would be inappropriate.
Thus, there are three contraventions with which to deal. The parties have taken me in their written submissions to the usual cases about what one looks towards to determine what an appropriate penalty might be. There are a number of factors that are ordinarily taken into account. Here, it is relevant to take into account, not as an aggravating factor, but as one which means that there is to be no discount to be applied to any penalty, that there was a full liability hearing, that there was no acceptance of the wrongdoing by the first respondent and that there has been no expression of contrition or regret. I am told that the order that I made for the payment of money to the applicant on 5 July has not yet been satisfied and that is something to be taken into account.
The parties focus in their submissions on whether the contraventions were deliberate. They need to be dealt with separately in each respect. The contravention of s. 351 was deliberate in the sense that there was a deliberate action taken to terminate the employment for the applicant. No reason was given and none was suggested in evidence before me. One can only infer and assume from all of that, that, as I found, the reason for the termination of the applicant’s employment was because the applicant was pregnant. That could be nothing other than a deliberate decision.
As to the contraventions of s. 357 the making of the representations about the nature of the engagement were, of course, deliberate. They are representations that were deliberately made – deliberately made in the sense that they were made in accordance with, presumably, the business model operated by the first respondent. The point made in the submissions for the first respondent is that the first respondent was mistaken about the effect of the arrangements and that highlights that there can be, of course, deliberateness in action with a view to producing a particular result which, as it turns out, does not produce that result. That does not mean that the result that was, in fact, produced was produced deliberately. Or there is the alternative and that is that the actions were undertaken deliberately to produce the deliberately false result.
In this case I think the former of those two alternatives is provided for in the evidence. I think it is the case that the first respondent probably did think that he could go about his business in the way in which he was and that it turned out differently was not because he had deliberately embarked upon an endeavour to contravene the provisions of the Fair Work Act but, rather, to conduct his business in a particular way which, as it turns out, was not in accordance with the law. He gave no evidence about receiving any particular advice about how he set up his business model. I consider that his actions were reckless.
The involvement of the second respondent in the contraventions was dealt with in my reasons for decision. His involvement in the contravention of s. 351 was direct. He was the decision-maker and despite all that occurred he chose to exercise his right to penalty privilege – something he was entitled to do. But that meant, of course, that there was really no evidence before me about the reasons for the termination and, as I say, the only conclusion one can draw now is that the reasons that were identified by the applicant were, in fact, the reasons. That is a serious matter.
His involvement in the contraventions concerning the payslips follows as a result of what I have described in these reasons as the first respondent’s business model. That is something that should be seen in that context. A mistaken belief about the legitimacy of that business model lead to the contraventions in respect of the payslips and there is no other reason for it.
The third respondent’s involvement in the contraventions is also set out in my reasons for judgment. I will call her “the office manager” for want of a better description. Again, her actions were consistent with the proposition that there was a legitimate business model that had been put in place by the first respondent or those that advise him and the check list, as such, referred to in paragraph 26 of my reasons and the subject of discourse in submissions before me this morning is an indicator, I think, of the effort, for want of a better word, that the first respondent and those that advise him have gone to so as to ensure that the business model that was being operated was legitimate.
So, taking all of those things into account and bearing in mind that the maximum penalty for each of the respondents in respect of the various contraventions is $12,600 I consider that in respect of the first respondent for the contravention of s. 351 of the Act that an appropriate penalty in that respect is $5,000. In respect of the contraventions of s. 357 of the Act I consider that an appropriate penalty is $3,000 and in respect of the contraventions of s. 536 of the Act an appropriate penalty is $1,000. Those penalties aggregate $9,000. I have no evidence before me about financial capacity of the first respondent, or the nature of his assets and liabilities. I do not know whether a penalty of $9,000 is crushing or oppressive. And so having regard to the totality principle I do not think it is appropriate to reduce that total of $9,000. It is, in my view, an appropriate response to the offending conduct in this case.
As for the second respondent the penalty in respect of the s. 351 contravention will also be $5,000. He was the prime motivator for that contravention. There was the opportunity to explain the decision, but it was never taken. In respect of the the payslips contravention there will be no penalty.
In respect of the third respondent and the misrepresentations contraventions – those of s. 357 of the Act – the penalty should reflect that she was an employee or a contractor, as she described it in the course of her evidence, of the first respondent and so was, effectively, following orders. The penalty in respect of the third respondent for those contraventions – the two of them should collectively be $1,500. In respect of the payslip contraventions I propose to impose no penalty.
So, in summary then, the aggregate penalty for the first respondent is $9,000. The penalty for the second respondent is $5,000 in the aggregate and for the third respondent the penalty is $1,500.
An issue has arisen during the course of submissions about where those penalties ought to be paid. The authorities tend to suggest that, ordinarily, an applicant who prosecutes a case like this should receive the fruits of the litigation and the penalty should be paid to them. In an interesting submission Mr O’Brien suggests that given that the applicant here is legally aided that, perhaps, the penalties ought best be paid to the Commonwealth. The applicant has not, he suggested, incurred legal costs and has not had to fund the proceedings. There is no evidence about any of this before me, of course, but the solicitor for the applicant suggests that she will be charged by Legal Aid because she has run her case and been successful.
Just how much she might be charged I have no idea. But, ultimately, the payment of pecuniary penalties to an applicant is not to be determined solely by reference to whether the applicant had to or will have to pay legal costs. It is part of the compensation, if one prefers, for having to bring proceedings in the first place to vindicate rights and to assist the administration of this country’s workplace laws. I do not have any difficulty in ordering that the penalties be paid to the applicant. I think that is appropriate in this case.
In her written submissions the applicant seeks further orders for compensation. The respondents oppose that.
In Dafallah v Fair Work Commission (2014) 225 FCR 559, Mortimer J talked about the need to ensure that cases such as these do not get confused with cases for unfair dismissal. The remedies are different, although, in some cases might overlap. Greenwood J touched on it in McIlwain v Ramsey Food Packaging Pty Ltd (No. 4) (2006) 158 IR 181 as well.
Here, there has already been an order for compensation. I do not intend to make any further orders for compensation for hurt or humiliation. This is not an unfair dismissal case.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 23 August, 2021. Associate:
Dated: 21 September 2021
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