Thai v Balcombe
[2021] FedCFamC2G 190
•14 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Thai v Balcombe [2021] FedCFamC2G 190
File number(s): MLG 2756 of 2019 Judgment of: JUDGE MCNAB Date of judgment: 14 October 2021 Catchwords: INDUSTRIAL LAW – contraventions of Fair Work Act 2009 (Cth) – default judgment – order made under s545(2)(b) for payment of compensation – where s 546(3) provides the court may order that penalty, or part of the penalty, be paid to the Commonwealth, a particular organisation or a particular person – penalty order made under s546(1) to be paid by respondent – relevant considerations. Legislation: Building and Construction General On-site Award 2010 cls 15.3(a), 15.6, 19.1, 19.8, 32, 36.2, 37.1, 38.1, 41.
Fair Work Act 2009 (Cth) ss 45, 57, 546, 557.
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 212.
Federal Circuit Court of Australia Act 1999 (Cth) s 15.
Federal Circuit Court Rules 2001 (Cth) r 13.03.
Cases cited: Australian Ophthalmic Supplies Proprietary Limited v McAlary-Smith [2008] FCAFC 8
Markarian v R [2005] HCA 25
Kelly v Fitzpatrick [2007] FCA 1080
Rocky Holdings Proprietary Limited [2014] FCAFC 62
Division: Division 2 General Federal Law Number of paragraphs: 44 Date of last submission/s: 14 October 2021 Date of hearing: 14 October 2021 Place: Melbourne Solicitor for the Applicant: Ryan Carlisle Thomas Lawyers Counsel for the Applicant: Mr Galbraith The Respondent: No Appearance ORDERS
MLG 2756 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AN THAI
Applicant
AND: JEREMY BALCOMBE
Respondent
ORDER MADE BY:
JUDGE MCNAB
DATE OF ORDER:
14 OCTOBER 2021
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) the Respondent pay pecuniary penalties in the total sum of $30,470 in respect of the contraventions set out in the orders of the Court dated 26 August 2021.
2.Pursuant to section 546(3)(c) of the Fair Work Act 2009 (Cth) the pecuniary penalties imposed be paid to the Applicant within 28 days of the date of these orders.
3.The pre-judgment interest ordered to be paid by Order 5 of the Orders of the Court dated 26 August 2021 (“the August Orders”) are fixed as follows:
(a)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(a) of the August Orders is fixed in the amount of $470.48 up to the date of judgment being 26 August 2021 (“date of judgment”);
(b)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(b) of the August Orders is fixed in the amount of $5,594.71 up to the date of judgment;
(c)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(c) of the August Orders is fixed in the amount of $800.23 up to the date of judgment;
(d)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(d) of the August Orders is fixed in the amount of $371.52 up to the date of judgment; and
(e)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(e) of the August Orders is fixed in the amount of $513.45 up to the date of judgment.
4.The pre-judgment interest ordered to be paid by order 6 of the August Orders are fixed as follows:
(a)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 4(a) of the August Orders is fixed in the amount of $1,222.85 up to the date of judgment; and
(b)Pre-judgment interest on the amount owed to the Applicant pursuant to paragraph 3(b) of the August Orders is fixed in the amount of $1,858.76 up to the date of judgment.
5.The amounts orders to be paid by the Respondent pursuant to paragraphs 3(a), 3(b), 3(c), 3(d), 3(e), 4(a) and 4(b) of the August Orders carry interest from the date of judgment in accordance with section 212 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) fixed at the rate of 6% above the cash rate published by the Reserve Bank of Australia from time to time thereafter.
AND THE COURT NOTES THAT:
A.The Applicant has reserved his position as to costs and may make application for orders as to the costs of the proceeding.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review 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
(Delivered Ex Tempore – Revised From Transcript)
INTRODUCTION
This proceeding was commenced by an application and statement of claim filed on
26 August 2019 and concerns, inter alia, the underpayments of wages and related employment entitlements due under the Building and Construction General On-site Award 2010
(“the Award”) during the Applicant’s employment with the Respondent between 17 March 2016 and 14 September 2018.By orders of the Court on 26 August 2021 (“the August 2021 Orders”), the Court:
(a)determined that the Respondent had committed the contraventions alleged by the Applicant;
(b)made declarations of those contraventions; and
(c)adjourned the proceeding to a penalty hearing on 14 October 2021.
The Applicant filed an affidavit on 17 September 2021 supporting the imposition of pecuniary penalties (“the Applicant’s Penalty Affidavit”).
I must make orders as to the penalties to be paid by the Respondent, and to whom the penalties are to be paid.
BACKGROUND
Procedural History
The Respondent has been on notice of the proceeding since at least 9 December 2019.
The Respondent was personally served with the originating application and statement of claim on 9 December 2019. Pursuant to r6.01 of the Federal Circuit Court Rules 2001 (Cth) (“the 2001 Rules”), parties to a proceeding are required to give an address for service. The Respondent did not do this as confirmed by the Court file in this matter and by the affidavit of Kristen Reid on 8 December 2020 (“the Reid Affidavit”).
The Applicant by way of application filed on 9 December 2020 sought:
(a)
pursuant to r13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth)
(“the 2001 Rules”) the Applicant have leave to proceed in the face of defaults by the Respondent pursuant to r13.03A(2)(a), (b)(i), (ii), (iii), (iv) and (vii) of the 2001 Rules; and
(b)the Court give judgment against the Respondent for the relief that is claimed in the statement of claim.
On December 11 2019 Judge Reithmuller made orders for the future conduct of the proceeding by consent (“the December 2019 Orders”). The December 2019 Orders required the Respondent to file and serve a defence to the statement of claim by 3 February 2020. Despite consenting to the December 2019 Orders, the Respondent acted in default, failing to file and serve a defence by 3 February 2020. Further, r4.03 of the 2001 Rules required the Respondent to file and serve a response within 28 days of the originating application. As confirmed by the Court file and the Reid Affidavit, the Respondent did not do this.
On 22 July 2020, Registrar Stone conducted a case management conference immediately after the conclusion of the mediation and made orders for further conduct of the proceeding, including listing the proceeding for final hearing on a date to be fixed (“July 2020 Orders”).
The July 2020 Orders required the Respondent to file and serve a defence to the statement of claim by 5 August 2020. In default of the July 2020 Orders, the Respondent did not file and serve a defence by 5 August 2020.
On 26 August 2021, the Court ordered that default judgement be entered for the Applicant against the Respondent (“the August 2021 Orders”) pursuant to r13.03B(2)(c) of the 2001 Rules by reason of the Respondent’s default pursuant to 13.03A(2) of the 2001 Rules by his failure to:
(a)give an address for service before the time for the Respondent to give an address has expired;
(b)file a response before the time for the Respondent to file a response has expired;
(c)comply with an order of the Court in the proceeding, being the December 2019 Orders and the July 2020 Orders;
(d)file and serve a document required under the 2001 Rules; and
(e)defend the proceeding with due diligence.
Contraventions of the Fair Work Act 2009 (Cth)
In the August 2021 Orders, the Court declared there was a total of eight contraventions of s45 of the FWA from the Respondent. The contraventions are set as follows:
(a)s45 of the FWA by failing to pay the Applicant minimum rates of pay for all ordinary hours of work as required by cl 19.1 and 19.8 of the Award;
(b)s45 of the FWA by failing to pay the Applicant overtime rates for all overtime hours worked as required by cl 15.3(a), 36.2 and 37.1 of the Award;
(c)s45 of the FWA by failing to pay the Applicant Sunday penalty rates for all relevant hours worked as required by cl 15.3(a) and 37.5 of the Award;
(d)s45 of the FWA by failing to pay the Applicant applicable rates of pay for public holidays as required by cl 15.3(a) and 41 of the Award;
(e)s45 of the FWA by failing to make superannuation contributions for the benefit of the Applicant, so as to avoid the superannuation guarantee charge, as required by cl 32 of the Award;
(f)s45 of the FWA by failing to make the necessary payments for annual leave and annual leave loading as required by cl 38.2 of the Award; and
(g)s45 of the FWA by failing to reimburse fees charged by an RTO as required by cl 15.6 of the Award.
Pursuant to s545(2)(b) of the FWA, the Court ordered that the Respondent pay the Applicant the following compensation with respect to the contraventions set out above:
(a)$1,996.81 with respect to superannuation during the period between 17 March 2016 and 31 December 2016, which amount must be contributed to the Applicant’s nominated superannuation fund;
(b)$33,521.57 with respect to underpaid wages during the period between 1 January 2017 and 1 April 2018 (the Apprenticeship Period);
(c)$4,794.71 with respect to superannuation during the Apprenticeship Period, which amount must be contributed to the Applicant’s nominated superannuation fund;
(d)$2,226.00 with respect to the failure to reimburse RTO fees; and
(e)$3,618.79 with respect to superannuation during the period between 3 April 2018 and 14 September 2018, which amount must be contributed to the Applicant’s nominated superannuation fund.
Pursuant to s15 of the Federal Circuit Court of Australia Act 1999 (Cth), the Court ordered the Respondent pay damages for breach of contract to the Applicant as follows:
(a)$5,190.00 with respect to underpaid wages for work between 17 March 2016 and 31 December 2016; and
(b)$13,100.50 with respect to underpaid wages for work between 3 April 2018 and 14 September 2018.
The matter was adjourned to 10.00am on 15 October 2021 for a further hearing in respect of the Applicant’s claims for the imposition of pecuniary penalties on the Respondent for the contraventions of s45 of the Fair Work Act 2009 (Cth) (“the FWA”) under the Award.
CONSIDERATION
The August 2021 Orders determined that the Respondent had contravened s45 of the FWA by breaching minimum pay, overtime pay, public holiday pay and holiday pay provisions of the Award. There are also findings that the Respondent failed to make superannuation contributions on behalf of the Applicant, had failed to pay annual leave loading and reimburse fees charged by a registered training organisation to the Applicant.
Orders were made adjourning the hearing of the application for a hearing in relation to penalties on 15 October 2021. I am satisfied that the August 2021 Orders together with the submissions in support of the imposition of penalties and the Applicant’s Penalty Affidavit were served on the Respondent at an email address provided for the orders of Judge Mercuri made on 30 July 2021. Other than participating in a mediation in 2020, the Respondent has played no role in this proceeding. There is no evidence to suggest he has sought to rectify the underpayments or other contraventions. The Respondent did not appear in Court to make submissions and has exhibited no contrition.
As established above, the Court has made findings in respect of eight contraventions. The maximum penalty per contravention is $12,600 and the total possible aggregate penalty is $100,800. I accept that each contravention is of a separate obligation and is a separate contravention as set out in Rocky Holdings Proprietary Limited [2014] FCAFC 62 at paragraph [13].
I do not believe that the Respondent can rely on a claim for course of conduct as referred to in s557(1) of the FWA as each of the found breaches arise from separate statutory obligations.
The matters pleaded in the statement of claim and verified again in the Applicant’s Penalty Affidavit, disclosed that the Applicant was employed by the Respondent from 17 March 2016 until 14 September 2018. It also discloses that during that period, the Applicant never received a group certificate or pay slip, with each payment that he received being late. No pleading was made to that effect in the statement of claim, and there has been no finding made that that has occurred. It is not intended that the penalties that are imposed are penalties reflecting that conduct or reflecting that there has been a finding made in relation to that. However, the established underpayments calculate to a total of $64,448.38, which includes $46,157.82 of award underpayments. This includes underpayments during a period in which the Applicant was an adult apprentice in the period from 1 January 2017 to 1 April 2018.
In my view, the Applicant has established in his evidence that underpayment during the Apprentice period from 1 January 2017 to 1 April 2018 forms a significant part of his remuneration, and that the underpayment caused particular stress to him and his family during that period. It is also significant that the Applicant was underpaid during a time that he was an apprentice.
The Applicant deposes that during the course of his employment with the Respondent, he had a newborn child and a family who was dependent on him as a sole provider, and that he did not receive income for months. Consequently, the Applicant missed out on the opportunity to make use of the funds that have not been paid to him. The Applicant also discloses that as a result of the underpayments, he had to borrow money from friends and family to manage the financial burden of his situation, causing him a great deal of stress. I accept that the evidence.
It is also significant that the Respondent failed to remit charges imposed by the registered training organisation that the Applicant was dealing with during the course of his time as an apprentice. I hold the underpayment of apprentices who are vulnerable and effectively rely on employers to observe the proper processes in order to support the relationship, to be particularly serious.
Counsel for the Applicant has made submissions in relation to the proper approach to determining penalties, and I accept those submissions to accurately reflect the state of the law as to the proper course to adopt. That course is that in determining an appropriate penalty:
(a)the Court needs to identify each separate contravention;
(b)regard is to be had of s557(1) of the Fair Work Act which allows for the treatment of multiple contraventions of the same civil penalty provision which results from a single course of conduct by the same person as a single contravention, and I note I’ve referred to that earlier and find that that provision has no application in this case;
(c)where two or more contraventions have common elements, this can be taken into account in determining what penalty is appropriate;
(d)the Court must have regard to all the circumstances of the case; and
(e)having fixed an appropriate penalty for each contravention the Court must consider the totality principle to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as necessary.
Whilst there is an abundance of authority for that submission, I refer in particular to Australian Ophthalmic Supplies Proprietary Limited v McAlary-Smith [2008] FCAFC 8 at paragraph [23] per Gray J, paragraph [71] per Graham J and paragraph [102] per Buchanan J. I also have regard to the matters identified by Tracey J as being potentially relevant to consider when imposing a penalty. Those matters are set out in Kelly v Fitzpatrick [2007] FCA 1080 at paragraph [14] in the decision. Those matters are:
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which the conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there has been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of 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; and
(m)the need for specific and general deterrence.
Some of those matters are not relevant to this case. The Court is required to determine an appropriate penalty in each case by a process of instinctive synthesis after taking into account all relevant factors. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion.[1]
The nature and extent of the conduct which led to the breaches and circumstances in which conduct took place
[1] Markarian v R [2005] HCA 25 at [37],[39].
There was a failure to comply with minimum safety net provisions, and, in particular, a failure to pay minimum rates of pay throughout the course of the relationship between the Applicant and the Respondent. The nature and extent of the breaches is referred to above as are the circumstances.
The nature and extent of any loss or damage sustained as a result of the breach
I refer to the matters raised earlier in relation to the quantum of the underpayments and the significance that has had on the Applicant. In my view, the underpayments of $64,448.38 in total as set out in the August 2021 Orders have had a considerable impact on the Applicant. This includes underpayments arising from the contraventions of the Award in the amount of $46,157.82. This represents a significant portion of the income he was entitled to receive.
Whether there has been serious previous conduct by the respondent
There is no evidence before the Court that the Respondent has previously breached similar provisions.
Whether the breaches were properly distinct or arose out of one course of conduct
This is a case where the contraventions are distinct, and the benefits of the course of conduct provisions of the FWA are not available to the Respondent.
The size of the business enterprise involved
The Applicant’s Penalty Affidavit states at paragraph [12] that the Respondent had other employees working for him on a full-time basis working 30 to 40 hours per week. The Applicant claims that there were a minimum of six other workers working for him at any given point of time. That would indicate that the Respondent is operating a small business, however, there is no evidence before the Court as to the turnover of business, the nature of the work, the value of the work being performed or the profitability of it. The fact that it is a small business does not mean that the Respondent is excused from complying with the provisions of the relevant workplace awards.
Whether or not the breaches were deliberate
Given the level of underpayment and the fact that they occurred over an extended period of time, it would appear that the Respondent was reckless in relation to his approach to the payment of wages and employee entitlement obligations.
Whether senior management was involved in the breaches
The contravention involved the Respondent who owned and operated the business. The Respondent set the Applicant’s rate of pay was directly involved in the contraventions.
Whether the party committing the breach has exhibited contrition
There is no evidence of any contrition. The Respondent has not sought to repay any amount to the Applicant and has engaged in the proceeding only by attending a mediation.
Whether the party committing the breach has taken corrective action
As set out above, the Respondent has not sought to rectify the breaches or take any other corrective action. The underpayment has not been rectified. There is nothing to suggest that the Respondent has taken appropriate corrective action in its business to protect against further contraventions of the FWA and the Award. This is an aggravating factor.
Whether the party committing the breach has cooperated with the enforcement authorities.
Whilst this application has not been brought by any authority, there has certainly been no cooperation in the conduct of the proceedings by the Respondent.
The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
This is not directly relevant because there has been no investigation. However, the statement of claim and the supporting material attached to it, the spreadsheets and the like, which evidence the underpayments, it made clear there had been considerable work done by the Applicant without the assistance of the Respondent in order to establish the level of the contraventions. To that extent, the penalty should reflect the general difficulties that are faced by applicants in seeking compliance when an employer does not pay the accurate rates of pay to employees. It is vital to ensure compliance with minimum standards so as to create an even playing field for employers to ensure all employees receive appropriate entitlements with respect to their employment.
The need for specific and general deterrence
This is a case where there is a need for specific deterrence, particularly in circumstances where the Respondent has failed to participate in the proceeding and acknowledge the minimum statutory entitlements of the Applicant. It is also necessary given the extent of the loss and damage suffered by the Applicant, coupled with a complete lack of contrition by the Respondent.
There is a strong need for general deterrence as this case outlines the significant and detrimental effects of the underpayment of wages can have on employees. These are not breaches arising from some technical reading of an award, or where the entitlements are extremely difficult to calculate by a competent and compliant employer. It is imperative that a penalty be imposed to emphasise the importance of the maintenance of effective minimum terms and conditions of employment and adherence to the provisions of industrial instruments. It is also vital that the penalties be imposed at a level which are sufficient so that they do not simply constitute a cost of doing business in the event that a disgruntled employee or a regulator may investigate.
Other relevant considerations
I was invited to consider other relevant matters which were raised by the Applicant’s Penalty Affidavit at paragraphs [14] and [15]. The Respondent appears to continue to operate a business called ‘Balcombe Construction Group’ and is performing work. The Respondent appears to continue to be doing construction work and posting photographs of the jobs that he is completing on social media under that business name. The Respondent also now appears to own and operates a second business, a tattoo and barber shop called ‘Deathwish Barbers & Tattoos Company Pty Ltd’ in St Kilda. The business has posted social media posts noting that the ‘Deathwish Barbers & Tattoos Company Pty Ltd’ “was hiring”. It appears that the Respondent is continuing to trade whether through that business and/or through ‘Balcombe Construction Group’.
In taking the matters set out above into account, and having considered the submissions of the Applicant in terms of the quantum of penalty, I appreciate that the Applicant has been measured in the submissions that have been made in relation to the quantum of penalty, recognising that there are eight penalties arising, and has not sought the maximum penalty or particularly close to the maximum penalty in respect of each of those found breaches. In light of the information established above, the penalty ranges and penalties to be imposed on the Respondent should be made in the following range:
(a)s45 of the FWA, by failing to pay the Applicant minimum rates of pay for all ordinary hours of work as required by cl 19.8 of the Award, 50 per cent, being the sum of $6,150, of the maximum applicable penalty;
(b)s45 of the FWA, by failing to pay the Applicant overtime rates for all overtime hours worked as required by cl 15.3(a) 36.2 and 37.1 of the Award, 50 per cent, in the sum of $6,150, of the maximum applicable penalty;
(c)s45 of the FWA, by failing to pay the Applicant Sunday penalty rates for all relevant hours of work as required by cl 15.3(a) and 37.5 of the Award, 20 per cent, being a sum of $2,520, of the maximum applicable penalty;
(d)s45 of the FWA, by failing to pay the Applicant applicable rates of pay for public holidays as required by cl 15.3(a) and 41 of the Award, the sum of $2,520, being 20 per cent of the maximum applicable penalty;
(e)s45 of the FWA, by failing to make superannuation contributions for the benefit of the Applicant so as to avoid superannuation guarantee charge as required by cl 32 of the Award, a sum of $7,560, being 70 per cent of the maximum applicable penalty;
(f)s45 of the FWA, by failing to make the necessary payments for annual leave and annual leave loading as required by cl 38.2 of the Award impose the penalty of $3,000, which is about 30 per cent of the maximum penalty; and
(g)s45 of the FWA, by failing to reimburse fees charged by the registered training organisation as required by cl 15.6 of the Award impose a penalty of $2,520.
The total aggregate penalty is the sum of $30,470. I will not reduce that sum by applying a totality principle, because in my view, they are the appropriate rates and that the total penalty is an appropriate amount given the nature of the underpayments, the extent of them and the lack of contrition. For these reasons, that amount is not required to be reduced.
The Court makes an order that the penalties payable by the Respondent be payable to the Applicant. This is an appropriate action rather than making an order that part or all of them be payable to the Applicant and part to the Commonwealth. This is a case where the Applicant has been left financially disadvantaged for a considerable period of time. There has been significant work performed by him and by his solicitors in order to prosecute this claim. For those reasons, people should not be deterred from bringing these actions, and making an order of this kind may be some incentive to others to pursue recovery proceedings. I have taken into account the Applicant’s interest calculations which were effectively held over for consideration when the August 2021 Orders were made. Those interest calculations have been provided to the Court, for which the Court accepts the accuracy of the calculations.
CONCLUSION
I will pronounce orders in the terms which were provided to me as a proposed form of orders, save that the sum of $30,470 will be inserted as to total sum.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab. Associate:
Dated: 26 October 2021
0
3
5