TWU v Pedro Kayias Pty Ltd

FEDERAL CIRCUIT COURT OF AUSTRALIA

TWU v PEDRO KAYIAS PTY LTD

[2015] FCCA 3466

Catchwords:
INDUSTRIAL LAW – Unfair dismissal – respondent found to have unfairly dismissed an employee – respondent ordered to pay compensation to employee by Fair Work Commission – appeal against determination dismissed by Full Bench of Fair Work Commission – respondent failed to pay monies ordered to be paid to employee concerned – employee member of the applicant industrial association – applicant has commencement enforcement and sanction proceedings – no proper response filed – compensation due to employee belatedly paid – question of penalties to be imposed – matters to be taken into account in assessing appropriate penalties – consideration of general and specific deterrence.

Legislation:

Fair Work Act 2009; ss.12; 385; 394; 405; 539(2); 545(1); 545(2); 546(1); 546(2); 546(3); 557(1)

Smith v Pedro Kayias Pty Ltd t/a Pete’s Vehicle Transport [2014] FWC 8798
Pedro Kayias Pty Ltd t/a Pete’s Vehicle Transport v Smith [2015] FWCFB 1519
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No3) [2011] FCA 579
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151
Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Kelly v Fitzpatrick [2007] 166 IR 14
Blandy v Coverdale NT Pty Ltd [2008] FCA 1533
Veen v R (No 2) (1988) 164 CLR 465
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Plancor Pty Ltd v Liquor Hospitality & Miscellaneous Union (2008) 171 FCR 357
Meadley v Sort Worx Pty Ltd [2013] FCA 1012

Applicant:

TRANSPORT WORKERS UNION OF AUSTRALIA SA BRANCH

Respondent:

PEDRO KAYIAS PTY LTD T/A PETE’S VEHICLE TRANSPORT

File Number:

ADG 67 of 2015

Judgment of:

Judge Brown

Hearing date:

29 September 2015

Date of Last Submission:

29 September 2015

Delivered at:

Adelaide

Delivered on:

23 December 2015

REPRESENTATION

Counsel for the Applicant:

Mr Lawrie

Solicitors for the Applicant:

Transport Workers’ Union of Australia

Counsel for the First Respondent:

Mr Timms

Solicitors for the First Respondent:

In person

ORDERS

It is declared that the Respondent has contravened section 405 of the Fair Work Act 2009 (Cth) by failing to comply with an order of Deputy President Bartel made on 5 December 2014 in the Fair Work Commission.
Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) the respondent shall pay a pecuniary penalty of $5,000.00 for its contravention of the order.
Pursuant to section 546(3) of the Fair Work Act 2009 (Cth) the pecuniary penalty is to be paid to the applicant within sixty days of the date of these orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 67 of 2015

TRANSPORT WORKERS UNION OF AUSTRALIA SA BRANCH

Applicant

And

PEDRO KAYIAS PTY LTD T/A PETE’S VEHICLE TRANSPORT

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant in these proceedings is the Transport Workers Union of Australia “the TWU”. It is an industrial association as defined by section 12 of the Fair Work Act 2009 (Cth) “the FWA”, namely it is an association of employees, one of the purposes of which is the protection and promotion of the interests of its members in respect of issues to do with their employment.
Mr Desmond Smith was, at relevant times, a member of the TWU. Until 6 March 2014, he was employed by the respondent in these proceedings, Pedro Kayias Pty Ltd trading as Pete’s Vehicle Transport “the respondent”. The respondent is a haulage firm, which delivers goods, particularly motor vehicles and equipment such as scaffolding for its customers.
On 6 March 2014, Mr Smith’s employment with the respondent was terminated. As a consequence, he commenced proceedings, in the Fair Work Commission, alleging that he had been unfairly dismissed. He sought various remedies pursuant to the provisions of section 394 of the FWA.
Mr Smith’s application came on for hearing before Deputy President Bartel on 5 December 2014.[1] The application was heard and determined in the absence of the respondent. Ultimately it was determined that Mr Smith had been unfairly dismissed by the respondent and was therefore entitled to compensation.
[1] See exhibit A – Smith v Pedro Kayias Pty Ltd t/a Pete’s Vehicle Transport [2014] FWC 8798
In his decision, Deputy President Bartel indicated that he was satisfied that the respondent had been provided with proper notice of the hearing concerned and given an ample opportunity to take part in it, but had failed to diligently apply itself to defending the proceedings. In these circumstances, Deputy President Bartel was satisfied that it would be unfair to Mr Smith to adjourn the proceedings.
Pursuant to section 385 of the FWA a person is taken to have been unfairly dismissed, if the Fair Work Commission is satisfied that the dismissal was harsh, unjust or unreasonable; and was not a case of genuine redundancy.
Pursuant to the Small Business Fair Dismissal Code it is fair for an employee to dismiss an employee summarily, when the employer concerned believes, on reasonable grounds, that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence or serious breaches of occupational health and safety procedures.
In other cases, a small business employer must give the employee concerned a reason why he or she is at risk of being dismissed. The reason provided must be valid in the sense that it is based on the employee’s conduct or capacity to do the job. In essence, the employee must be warned by the employer concerned in order to have an opportunity to rectify the problem arising in his or her employment.
In Mr Smith’s case, he alleges that he was medically incapacitated, on 5 March 2014, due to a back injury. It is his position that he advised Mr Kayias, who is the sole director of the respondent that he was attending a medical appointment the following day. Mr Smith asserted that Mr Kayias became angry and said words to the effect that Mr Smith was too hard to work with and the two might have to part ways.
On 6 March 2014, Mr Smith alleges that, whilst waiting to see the doctor because his back remained sore, he received a text message from Mr Kayias informing him of his termination and advising him that he was entitled to two weeks’ pay in lieu of notice and the money, so calculated, would be paid into his account.
The respondent filed a response to these claims and raised concerns about Mr Smith’s work performance. The respondent alleged as follows:
·Mr Smith would not comply with the required hours of work and was not a team player;
·He refused to comply with the transport co-ordinator’s directions;
·In December of 2013, he had been rude to personnel of a client of the respondent and had refused to undertake a load;
·He had taken time off, without pay, after his request for time off had been refused.
In addition, the respondent alleged that Mr Smith had defied Mr Kayias’ instruction to cease work after Mr Smith had indicated he was suffering an irregular heartbeat on 28 February 2014. In this context, Mr Smith deposed that he had attended the Lyell McEwen Hospital on that day and the following Saturday and been told that the medical staff could find nothing wrong with his heart and opined that his problems might relate to stress.
It was Mr Kayias’ position that he had requested Mr Smith provide him with a medical clearance that he was fit for work, but this had not been forthcoming from Mr Smith. Mr Kayias claimed that this apparent defiance placed both Mr Smith and members of the public at risk. Mr Smith denied that he had been asked for the medical clearance in question.
The matter was referred to conciliation, by the Fair Work Commission, on 24 July 2014. The parties were apparently able to reach agreement but no formal agreement was provided and the matter was referred back to the Commission.
As a consequence, the matter was fixed for trial on 25 and 26 November 2014. The respondent was ordered to file documents and witness statements by 14 November 2014, but failed to do so.
On 24 November 2014, the respondent sent an email to the Fair Work Commission requesting an adjournment until its Corporate Services Manager had returned to Adelaide.
However, neither Mr Kayias nor any representative on his behalf attended the Commission on 25 November 2014. This was the background to Deputy President Bartel making the following finding.
“I was satisfied that the respondent’s actions and inactions had already delayed this matter for some 3 months and that despite the significant amount of time within which to file his documents, he had failed to comply. In his correspondence requesting an adjournment Mr Kayias requested that he be advised in relation to the matter but then failed to read the advice provided. Mr Kayias has not demonstrated an appropriate level of diligence in relation to this matter over a long period of time and I decided that in all the circumstances it would be unfair to the applicant to further adjourn the proceedings. Accordingly, the application was heard in the employer’s absence.”
Deputy President Bartel was further satisfied that there had been no breach of the Small Business Fair Dismissal Code. He was also satisfied that Mr Smith had not been warned that he was at risk of being dismissed, particularly in respect of his failure to provide a medical clearance from the Lyell McEwan Hospital.
He also concluded that the dismissal of Mr Smith was harsh unjust and unreasonable. In these circumstances Deputy President Bartel made the following findings:
“Wages information supplied by the applicant show that he was receiving an average $1200 per week (gross) in the months leading to his dismissal, so that earnings over the anticipated period of employment would be $46,800.
The applicant was on workers compensation income maintenance payments for a period of approximately 3.5 months post dismissal, during which time he received $14,160. I am satisfied that he then took reasonable steps to mitigate his loss and in fact he obtained employment at the end of June 2014. The applicant’s earnings in the new employment are approximately $1,000 per week. In addition, he received 1 weeks pay in lieu of notice on termination of employment. The remuneration received by the applicant during the period from dismissal up to the end of the anticipated period of employment is approximately $38,360.
Deducting these earnings from the remuneration the applicant would have received during the anticipated period of employment with the employer, leaves an amount of $8,440. In all the circumstances I consider that this is reasonable and fair amount of compensation, and an order that the employer pay this amount within a period of 21 days, is attached to this decision.”
On 2 March 2015 the respondent filed a notice of appeal in respect of Deputy President Bartel’s decision and the order that Mr Smith be paid compensation in the sum of $8,440.00. This was approximately 80 days after the decision in question had been made. The rules applicable provide a period of 21 calendar days, after the date of the decision in question, in which any appeal must be filed.
On 18 March 2015, the Full Bench of the Fair Work Commission dismissed the respondent’s application to extend time to file the appeal and dismissed its notice of appeal on the basis that it was incompetent.[2]
[2] See Pedro Kayias Pty Ltd t/a Pete’s Vehicle Transport v Smith [2015] FWCFB 1519
On 2 March 2015, the TWU commenced these proceedings, in this court, on behalf of Mr Smith. It is the TWU’s position that the respondent did not comply with the orders of the Fair Work Commission regarding the payment of compensation to Mr Smith in the sum of $8,440.00. It asserts that the respondent is liable to a civil penalty as it has contravened a term of an order applicable to it in contravention of section 405 of the FWA.
Section 405 appears in Division 5 of Part 3-2 of the FWA, which deals with unfair dismissal. It reads as follows:
“405. A person to whom an order under this Part applies must not contravene a term of the order.”
I am satisfied that the order that the respondent pay Mr Smith the sum of $8,440.00 was a term of an order made by the Fair Work Commission pursuant to Part 3-1 of the FWA. In its statement of claim filed 2 March 2015 the TWU seeks the following relief:
“a)A declaration that the Respondent contravened section 405 of the Fair Work Act 2009 by failing to comply with the Order of Deputy President Bartel in the matter of Mr Desmond Smith v Pedro Kayais Pty Ltd T/A Pete’s Vehicle Transport [2014] FWC 9798.
b)An order pursuant to section 545(2) of the Fair Work Act 2009 that the Respondent compensate Mr Smith by paying him an amount of $8,440.00 plus 9.5% superannuation, less taxation as required by law.
c)An order pursuant to subsection 547(2) of the Fair Work Act 2009 that interest be paid to Mr Smith by the Respondent on the amount referred to in the Order sought in Paragraph 2 above.
d)An order that all amounts due to Mr Smith pursuant to these orders be paid within 14 days.
e)An order pursuant to subsection 546(1) of the Fair Work Act 2009 imposing a pecuniary penalty on the Respondent in respect of the contravention set out in paragraph 1 above.
f)An order pursuant to subsection 546(3) of the Fair Work Act 2009 that all pecuniary penalties imposed be paid to the Applicant.
g)An order that the Applicant have liberty to apply on seven days notice in the event that any of the preceding orders are not complied with.
h) Such further orders as the court considers appropriate.”

The hearing of the proceedings to date

The TWU’s application was filed on 2 March 2015 and was given a first return date of 7 April 2015. On this date, the respondent was represented by Mr Timms, who is its corporate services manager. At this stage, the respondent had not filed a response.
On this date, Mr Timms asserted that the case raised significant constitutional issues. On that basis he sought that the court adjourn the proceedings sine die, after having issued notices, pursuant to section 78B of the Judiciary Act 1903 (Cth) to the Attorney Generals for each of the Australian States and the Commonwealth.
The basis of the referral was said to be that, when the original States of the Commonwealth had consented to the establishment of the Commonwealth of Australia, they had no “sovereignty to establish any parliaments or governments in their own right/s.” As such, by necessary implication, it was asserted that the Commonwealth was ultra vires and therefore the Fair Work Act itself was invalid.
Mr Timms is not legally qualified. I considered his submissions to lack any legal validity or substance. I therefore declined his application to issue constitution notices, pursuant to Division 10.3 of the Federal Circuit Rules 2001.
However, I directed that the respondent file a response to the TWU’s application and adjourned the matter to 9 June 2015. On this day, the respondent filed a response, which reiterated its earlier constitutional claims regarding the invalidity of the Commonwealth of Australia but did not otherwise deal with the substance of the TWU’s claim regarding the dismissal of Mr Smith and the non-compliance with the orders for compensation made by the Fair Work Commission.
At this stage, it was my view that the respondent was failing to defend the proceedings with due diligence.[3] I reached this conclusion because it was my view that the response filed was entirely inadequate, particularly given that I had informed Mr Timms that I considered his submission that the Commonwealth of Australia was invalid to be a frivolous and vexatious one, which was entirely lacking in merit.
[3] See Rule 13.03A of the Federal Circuit Court Rules (1999)
On this basis, I formed the view that the applicant was entitled to have its application summarily determined. Accordingly, on 9 June 2015, I made the following orders:
“1. The matter is fixed for undefended hearing regarding the enforcement of the order made by the Fair Work Commission and whatever penalties should be imposed should a breach be established on 14 August 2015 at 2.15 pm with one (1) hour allowed.
2. The response filed 9 June 2015 is struck out.”
On 14 August 2015, Mr Lawrie appeared for the TWU and made his submissions. He sought the imposition of a penalty on the respondent. Mr Timms attended on behalf of the respondent. In oral submissions, he conceded that Mr Smith had not been paid the moneys due to him pursuant to the order of Deputy President Bartel.
He opposed the imposition of a penalty on the respondent and, on this basis, I was prepared to adjourn the proceedings, notwithstanding that I had earlier determined that they would be finalised on an undefended basis. In these circumstances, I made the following orders:
“The Respondent file and serve an Affidavit they propose to rely on in relation to and in respect of penalty and mitigating circumstances concerning the non compliance with the Fair Work Commission order.
The proceedings be adjourned to 10:00am on 29 September 2015.”
Mr Kayias filed an affidavit on 23 September 2015. In this affidavit Mr Kayias deposed that Mr Smith had been paid the sum of $8,440.00. Mr Lawrie, on behalf of the TWU, conceded this was the case.
In the circumstances, the issue for the court at the present time, the issue before the court is what penalty should be imposed on the respondent for its breach of the orders of Deputy President Bartel regarding Mr Smith’s unfair dismissal.

The legislative framework applicable

A note to section 405 of the FWA indicates that it is a civil remedy provision. The procedure to be followed in respect of any alleged breach of such a provision is set out in Part 4-1 of the Act.
Section 545(1) & (2) provide this court with broad powers to deal with any contravention of a civil remedy provision arising under the FWA. The court may grant an injunction to prevent a contravention; it may make an award of compensation in respect of such contravention; and it may make an order for the reinstatement of the person concerned.
In addition, pursuant to section 546(1) of the FWA the court has power to impose a pecuniary penalty or fine in respect of any contravention of a civil remedy provision. The section provides as follows:
“(1)The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.”
Section 539(2) provides the maximum penalty applicable to the relevant contravention in the current proceedings. Where proceedings arise in the Federal Circuit Court, in respect of unfair dismissal, the maximum penalty, which can be imposed under section 405, is 60 penalty units.
At the relevant time, a penalty unit was $170.00. However, pursuant to section 546(2) of the Act, if the person who has committed the offence in question is a body corporate, the maximum penalty is to be multiplied by five. Accordingly the maximum penalty applicable to the respondent in this matter is $51,000.00.
The approach, which the court is required to take in respect of fixing a penalty, following contravention proceedings, is not controversial. It has been delineated in a number of decisions of the Federal Court[4] and described as a four step process, which I will summarise as follows:
·Firstly, the court should identify each separate contravention arising from a breach of either the applicable award or the FWA and determine whether any of these arise in a single course of conduct within the terms envisaged by section 557(1);
·Secondly, determine what is the appropriate penalty to be imposed (whether in terms of a single episode of contravention or as part of a course of conduct), having regard to all the circumstances of the case;
·Thirdly, give consideration to whether any of these contraventions contain common elements and factor this into considering what is an appropriate penalty, in all the circumstance, for each contravention;
·Fourthly, apply the totality principle. This final step constitutes a review of the aggregate penalty thus far calculated and a consideration of whether such a penalty is an appropriate response to the conduct which led to the various contraventions. This step has been categorised as a process of instinctive synthesis.[5]
[4] See Fair Work Ombudsman v Kentwood Industries Pty Ltd (No3) [2011] FCA 579 per McKerracher J applied in Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [42] per Mansfield J
[5] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [55] per Graham J

In this case, there is only one breach to which a financial penalty should attach. The fundamental task, for the court, is to determine, from all the factual circumstances arising, the gravity or seriousness of the offending, which it is called upon to penalise.
Again there is little legal controversy as to the considerations relevant to this task, which have been delineated in a number of decisions of both this court and the Federal Court.[6]
[6] See Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Kelly v Fitzpatrick [2007] 166 IR 14 at [14]; Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 at [23]
The considerations are as follows:
·The nature and extent of the conduct which led to the breaches;
·The circumstances in which the conduct took place;
·The nature and extent of any loss or damage sustained as a result of the breaches;
·Whether there has been similar previous conduct by the respondent;
·Whether the breaches were properly distinct or arose out of the one course of conduct;
·The size of the business enterprise involved;
·Whether or not the breaches were deliberate;
·Whether senior management was involved in the breaches;
·Whether the party committing the breaches has exhibited contrition;
·Whether the party committing the breaches has taken corrective action;
·Whether the party committing the breaches has cooperated with the enforcement authorities;
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
·The need for specific and general deterrence.
However, the court needs to be careful not to apply a formulaic approach to the imposition of penalties or attempt to extrapolate the penalties imposed in one case to the circumstances of another. Each case involving the imposition of a civil penalty warrants an idiosyncratic approach and a careful analysis of all relevant circumstances. As was stated in Australian Opthalmic Supplies:
“Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case.”[7]
[7] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (supra) at [12]
Clearly the check-list, as enumerated above, is useful. It is not, however, to be regarded as an exhaustive list of factors to be considered. The ultimate control on any sentence is that it must be proportionate to the offence committed. A court is not permitted to impose a sentence greater than is warranted by the objective circumstances of the offending.[8]
[8] See Veen v R (No 2) (1988) 164 CLR 465 at 472

Discussion of factors relevant to penalty

(a) Nature and extent of the conduct in question

The respondent was found, by the Fair Work Commission, to have unfairly dismissed Mr Smith. This finding occurred in the absence of any formal submissions from the respondent. A subsequent appeal was dismissed, by the Full Bench, because it was found to have been incompetent. It was lodged a significant period out of time.
Throughout this process, Mr Timms has represented the interests of the respondent company. He is not legally qualified and, with the greatest respect to his abilities, appears to me to have been completely out of his depth. He was overseas when the hearing before Deputy President Bartel occurred and Mr Kayias apparently lacked the capacity to appear before the Commission himself.
In my view, there has been a disconnect between the respondent and the processes of the Fair Work Commission, which has been characterised more by ignorance and incompetence, on the part of the respondent company than by stubbornness and contempt, by it, for the Commission. In this context, it is important to bear in mind that the respondent is a small enterprise, which lacks any substantial human resources and industrial relationship support.
However, the fact remains that the respondent was found to have acted unfairly in respect of Mr Smith’s dismissal and was ordered, by the Commission, to pay him compensation. It is only with the institution of these proceedings that Mr Smith has belatedly been paid his proper entitlements, as ordered by the Fair Work Commission, approximately nine months after the order of Deputy President Bartel.
In these circumstances, I agree with the submission of Mr Lawrie, counsel for the TWU, that the respondent has shown scant regard for the decision of the industrial arbiter and the industrial relations system as a whole. However, in my view, its position has also been characterised by ignorance and incompetence.

b) The nature and extent of the loss

The moneys due to Mr Smith came to $8,440.00. To both Mr Smith and the respondent, it represents a significant sum of money. It has however been paid in full, albeit belatedly. In my view, its payment is a significant mitigating factor, which favours the respondent. Mr Smith is no longer personally out of pocket. He has received his dues.

c) Similar previous conduct

The respondent is to be regarded as a first offender. There is no evidence before me to indicate any prior behaviour of a similar nature. This is also a factor in mitigation.

d) Size and financial circumstances of the respondent

On 23 September 2015, Mr Kayias filed an affidavit, in which he set out what he asserts are the circumstances of the respondent company. This evidence was not subject to any scrutiny or cross-examination by Mr Lawrie. Mr Lawrie does however concede that Pete’s Vehicle Transport is to be regarded as a small business.
It is Mr Lawrie’s submission, with which I agree, that the smallness of the enterprise concerned, in breach proceedings such as this one, may provide some form of explanation for the offending behaviour but does not necessarily excuse it.
In this regard, I adopt what was said by Driver FM (as his Honour then was) in Rajagopalan v BM Sydney Building Materials Pty Ltd[9] as follows:
“Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.”
[9] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27].
However, in my view, I must still have some regard to the size and resources of the respondent company in fixing an appropriate and fair penalty. In this regard, I accept that the company has eight full-time employees and three part-time staff. It owns some vehicles, which are subject to finance.
The respondent company was incorporated approximately ten years ago. Mr Timms describes it as being essentially a corporatised small family business. He categorises its staff as being more akin to friends of the business than its employees. Mr Kayias also deposes that he employed Mr Smith, as an act of generosity, when he discovered the gentleman was out of work. In the absence of evidence from Mr Smith, I take this evidence with a grain of salt.
Overall, it is Mr Kayias’s evidence that the respondent company does not make any profit, after payment of its overheads and is also encumbered by a significant level of debt, including a debt of approximately $9,000.00 to the Australian Taxation Office and approximately $17,000.00 to WorkCover.
I accept that the respondent company does operate in a highly competitive industry and is highly leveraged. As such, I accept that it operates on a financial knife edge and any significant penalty has the potential to throw it into liquidation, with adverse consequences for other of its employees.

e) Contrition

The only demonstration of contrition, made by the respondent company, is the payment of the moneys due to Mr Smith. This payment came belatedly and only as a consequence of the current proceedings. Otherwise, Mr Timms has attempted to portray Mr Smith as an undeserving and ungrateful person, who was a drain on the business. It is Mr Timms’ submission that, if the company had been able to argue its case before the Fair Work Commission, it would have been entirely vindicated in its dismissal of Mr Smith.
Given the dismissal of the respondent company’s appeal before the Full Bench of the Fair Work Commission and the absence of any further appeal, I am unable to resolve this issue, which, in any event, is beyond the scope of these proceedings. However, in my view, Mr Timms’ position that the respondent company is more sinned against than sinning demonstrates a clear lack of contrition.
In addition, Mr Timms has also portrayed himself and the company as being little people, who must struggle against the far greater resources of the TWU, which has a vengeful and unreasonable attitude towards it. Again, this attitude demonstrates no contrition on the part of the respondent company. It is also essentially self-serving and I reject it.
Finally, Mr Timms’ submissions regarding the constitutional invalidity of the Fair Work Commission were, at best, misguided and, at worst, purposefully fatuous. Again, this submission demonstrates no regret, on the company’s behalf for its behaviour. Rather, in my view, this behaviour demonstrated a desire to frustrate the proceedings of this court. However, at the end of the day, to its credit, the respondent company did pay Mr Smith his entitlements.

f) Deliberateness of the breaches

I do not consider that the respondent company went out of its way to deliberately and contemptuously breach its obligations arising as a consequence of the decision of Deputy President Bartel. Rather, it has been poorly advised in its conduct of the litigation before the Commission, which resulted in it not appearing at the actual hearing and then grossly mishandling its appeal to the Full Bench. Thereafter, it has pig headedly ignored its obligations in a manner, which can be likened to an ostrich with its head in the sand.

g) Involvement of senior management

As previously indicated, Pedro Kayias Pty Ltd is an extremely small business. Its senior management consists of Mr Kayias himself and Mr Timms, who describes himself as the company’s operations manager. On any view, the company does not have a complex corporate structure.

h) General deterrents

One of the central purposes of imposing a civil penalty, in proceedings such as these, is to deter other employers or individuals from embarking upon a similar course of conduct to that engaged upon by the transgressing employer.
In my view, it is also important that this court emphasises the importance of compliance with orders of the Fair Work Commission in order to ensure that employees receive their proper entitlements, particularly in the context of unfair dismissal decisions of the Commission.
In this context, it is important to the administration of the industrial relations system as a whole that both employers and employees are aware that this court will enforce determinations of the Commission and that those who disobey the Commission’s directives are liable to be sanctioned.
Otherwise, there is the potential for the industrial relations system, which the Commission oversees, to fall into disrepute. This would not be in the public interest. As the High Court pointed out in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate: [10]
“The purpose of a civil penalty … is primarily if not wholly protective in promoting the public interest in compliance.”
[10] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55]
As I have previously indicated, there is an air of Laurel and Hardy incompetence surrounding the manner in which the respondent company engaged first with the Fair Work Commission and then with this court.
In my view, these circumstances diminish rather than accentuate the need for general deterrence, particularly in circumstances where Mr Smith’s entitlements have been paid. However, the fact remains that the TWU was compelled to bring these proceedings to enforce the determination of the Fair Work Commission.

j) Specific deterrence

Considerations relevant to specific deterrence focus on the individual circumstances of the offender concerned and require some degree of prognostication as to the likelihood of re-offending. The most reliable tool for such prognostication is usually the attitude expressed by the party in question.[11]
[11] See Plancor Pty Ltd v Liquor Hospitality & Miscellaneous Union (2008) 171 FCR 357 at [37] per Gray J
In the circumstances of this case, I do not think that there is a high risk of ongoing non-compliance by the respondent company, with any further obligation likely to be imposed upon it by either the Fair Work Commission or any other industrial organisation or officer responsible for the enforcement of workplace obligations within Australia.

Conclusions

Mr Lawrie characterises the actions of the respondent company as amounting to a very serious breach of the applicable legislation, which calls for the imposition of the maximum penalty of $51,000.00. With due respect to Mr Lawrie, I do not consider the respondent’s actions falls into the worst category. In my view, the likelihood of reoffending is minimal and so the need for specific deterrence is limited. I decline to impose the maximum penalty.
In these circumstances, the court needs to examine closely the circumstances of the respondent’s offending, whilst bearing in mind the importance of the court supporting the regulatory scheme administered by the Fair Work Commission and maintaining public confidence in it.[12]
[12] See Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (supra) at 580
The respondent is a small and unsophisticated enterprise with scant resources in respect of its personnel and industrial relations obligations. It mishandled these obligations before the Fair Work Commission. However, even if it was done through gritted teeth, it has paid Mr Smith his due entitlements.
However, notwithstanding these factors, issues relating to general deterrence must loom large. In Meadley v Sort Worx Pty Ltd[13] Tracey J said as follows in respect of breach proceedings relating to an employer’s failure to pay compensation following a determination of the Fair Work Commission relating to unfair dismissal:
“The Commission is charged with the responsibility of ensuring that employees are accorded the protection from proscribed adverse action to which they are entitled under the Act. When the Commission finds that an employee has been unfairly dismissed and makes remedial orders those orders must be complied with unless a stay is granted pending appeal. An employer is not entitled unilaterally to determine to ignore an order made by the Commission. This was not a case in which the employer was unable to meet its obligations; it simply chose not to do so. This was a serious contravention and the need for general deterrence weighs as a heavy consideration in fixing penalty. Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engage in similar misconduct.”
[13] Meadley v Sort Worx Pty Ltd [2013] FCA 1012 at [45]
My responsibility is to fix a penalty for Pedro Kayias Pty Ltd at a meaningful level, but which is not crushing of it. I have come to the conclusion that a penalty of $5,000.00 is the appropriate one. In reaching this penalty I have had particular regard to the small nature of the offending company and the fact that a larger penalty may send it into liquidation.
Pursuant to the provisions of section 546(3) of the Act, I will order that the penalty be paid to the applicant industrial organisation. In these circumstances, I will not make an order as to costs.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judge Brown

Associate:

Date: 23 December 2015

[2015] FCCA 3466

23 December 2015

Key Legal Topics

Areas of Law

Employment Law

Legal Concepts

Procedural Fairness

Natural Justice