Vega v National Noise and Vibration Pty Ltd
[2024] FedCFamC2G 1308
•29 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Vega v National Noise and Vibration Pty Ltd [2024] FedCFamC2G 1308
File number: SYG 164 of 2024 Judgment of: JUDGE D HUMPHREYS Date of judgment: 29 November 2024 Catchwords: FAIR WORK – assessment of pecuniary penalties as against the second respondent – nature and extent of loss – specific and general deterrence - payment of penalty to be made. Legislation: Fair Work Act 2009 (Cth) ss 44, 45, 90(2), 340(1), 546(3)(c). Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Ophthalmic Supplies Pty Ltd v McAlary Smith (2008) 165 FCR 560; [2008] FCAFC 8
Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70
Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372; [2001] FCA 672
Division: Division 2 General Federal Law Number of paragraphs: 25 Date of hearing: 15 November 2024 Place: Parramatta Counsel for the Applicant: Mr Meagher Solicitor for the Applicant: Mr Clouston (Work Lawyers) Solicitor for the First, Second and Third Respondents: No appearance ORDERS
SYG 164 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: RODRIGO VEGA
Applicant
AND: NATIONAL NOISE AND VIBRATION PTY LTD
First Respondent
ALEX GOUVAS
Second Respondent
MICHAEL PHILLIPS
Third Respondent
ORDER MADE BY:
JUDGE D HUMPHREYS
DATE OF ORDER:
29 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The Second Respondent pays penalties under the Fair Work Act 2009 (Cth) (FW Act) to the Applicant of $35,000.00 within 28 days of the date of this order, in accordance with s 546(3)(c) of the FW Act.
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 D HUMPHREYS
INTRODUCTION
On 25 October 2024, the Court, gave judgment by default in favour of the applicant as against the first respondent, National Noise and Vibration Pty Ltd, in that the first respondent contravened:
(a)Section 340(1) of the Fair Work Act 2009 (Cth) (“FW Act”) by dismissing the Applicant;
(b)Sections 44 and 90(2) of the FW Act by failing to pay annual leave on termination of the applicant's employment; and
(c)Section 45 of the FW Act by failing to pay superannuation to the Applicant.
The Court further found that the second respondent, Mr Alex Gouvas and the third respondent, Mr Michael Phillips, were involved in each of the contraventions of the first respondent and pursuant to s 550 of the FW Act were taken to have also contravened these provisions.
On that day, there was no appearance of the first respondent and the third respondent. Mr Gouvas appeared in person for the first time in the proceedings. Given that he had not filed a notice of address for service, a response or defence and was aware that the matter was listed for default judgement, the Court dealt with the issue of liability as against all of the respondents, however adjourned the proceedings in relation to the issue of penalty as against the second respondent, Mr Gouvas. Orders were made for the matter to be adjourned for hearing in relation to the determination of penalties against Mr Gouvas to 15 November 2024.
Prior to the listed hearing on 15 November, the Court was provided with a medical certificate confirming that Mr Gouvas was to undergo a medical procedure at Sydney Colorectal Associates and would be unfit for work duties from 14 November to 16 November 2024 inclusive. In these circumstances, the Court was of the view that it was inappropriate to proceed with the matter in the absence of Mr Gouvas. The Court notes that it was not made aware on 25 October that Mr Gouvas was scheduled to undertake any medical procedures on the date listed for further hearing. The inability of Mr Gouvas to attend the hearing has caused the applicant additional legal expense.
To circumvent any further unnecessary legal expense by the applicant, and on the application of the applicant, the Court directed that Mr Gouvas file submissions in relation to penalty of no more than 10 pages by 22 November 2024, and unless an application was bought to have the matter determined otherwise, it would be determined on the papers in Chambers.
On 22 November 2024, by way of email to Chambers the Court received material from Mr Gouvas which did not in any way touch on the issue of penalty. No further written submissions have been received from Mr Gouvas.
Accordingly, the matter has been determined on the basis of the information currently before the Court.
THE LAW IN RELATION TO THE FAIR WORK ACT: PECUNIARY PENALTIES
The Court has a broad discretion as to penalty. It is asserted in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71] that the Court should fix a penalty “it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act”. Further at [10] and [12], the High Court stated that the penalty must not exceed what is “reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravener and others”.
In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 Bromwich J summarised how the discretion is to be approached at [36], as follows:
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply 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 are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation; (see: Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979 (“Nobrace”) per Kelly J at [65]). As these principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination on issues of specific and general deterrence; (see: Nobrace at [66]).
The FW Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty; (see: Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349 at [88]). The choice of penalty must be guided by the "individual circumstances of a case, not by a line by line comparison with another case"; (see: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [12]). The process is an intuitive one by the Court and not an application of a scientific process; (see: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 at [60] [63]) .
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7, Mowbray FCM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
(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 sustained as a result of the breaches;
(d)whether there has been similar previous conduct by the Respondents;
(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 enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372 set out some guiding considerations for the Court at 374:
… matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach …
The Applicant's Submissions
The applicant submits there was a strong need for deterrence in this case, as;
(a)the first respondent’s breaches relate to underpayment of wages to a relatively low paid employee, being on $65,000 per year;
(b)there has been no remorse shown from the respondent's, far from it, they have avoided the proceedings and their responsibilities entirely, demonstrating strong need for deterrence;
(c)the underpaid annual leave and superannuation followed complaints of other underpayments;
(d)the uncontested evidence of the applicant shows that the breach of the general protections provisions were a serious one, after making complaints about underpayments, without so much as a warning regarding his work and having received "glowing" appraisals of his work as excellent, his employment was terminated because he complained;
(e)although it is accepted by the applicant that the employer is a relatively small undertaking, the seriousness of the conduct brings home the need for a significant penalty.
The following penalties were submitted were appropriate in all the circumstances in respect of the second respondent, Mr Gouvas:
Breach
Maximum
Appropriate Penalty
Breach of s 340(1) by dismissing the Applicant
$18,780
$12,500
Breach of ss 44 and 90(2) of the FW Act by reason of failure to pay annual leave on termination
$18,780
$12,500
Breach of s 45 by failing to pay superannuation
$18,780
$12,500
CONSIDERATION
Given the failure of the second respondent to participate in the proceedings up until the last minute, and the failure to take advantage of the opportunity provided to him to provide submissions on penalty, the Court is left in the situation where there is no mitigating material that it can take into account in relation to penalties.
The Court is satisfied there are three separate contraventions which should be dealt with independently on the basis that there is no overlapping conduct. Each is a separate and discrete breach and should be dealt with independently and not aggregated with any other breach.
The nature and extent of the conduct which led to the breaches has been set out above in that the applicant was terminated from his employment when he made complaints about other underpayments, and in so doing was not paid either superannuation or his annual leave entitlements on termination. The nature and loss sustained as a result of the breaches amounts to $5,197.40, being unpaid annual leave on termination. A further $6,706.04 was lost in respect of unpaid superannuation and $7,900.20 for economic loss as a result of the termination, noting the applicant obtained alternative employment after a period of five weeks. These amounts are considerable, noting that the applicant was on an annual salary of some $65,000.00 per year.
The Court is unaware of whether there has been similar, previous conduct on behalf of the respondents. Based on the information before the Court, the Court is satisfied that the first respondent was a relatively small undertaking with limited financial resources.
The Court is satisfied that the breaches were deliberate and that Mr Gouvas, as a senior manager of the first respondent, was involved in the breaches.
The Court is satisfied that there has been a complete absence of contrition, and notwithstanding the second respondent being advised that corrective action would be a significant matter by way of mitigation, no payments had been made to the applicant.
The Court is satisfied that this is a matter where there was a need to ensure compliance with the provisions of the FW Act and there is a strong need for specific and general deterrence as a result. Any penalty needs to have sufficient sting in the tail such that the cost of non-compliance will greatly outweigh the cost of compliance with the provisions of the Act such as to deter both the respondents in the future from committing similar acts and from others who might also consider taking similar unlawful action. The Court has said on many occasions that wage theft, which includes the failure to pay entitlements on termination, will not be tolerated.
In the absence of any material indicating previous breaches, the second respondent must be treated as a first offender and an appropriate discount on any penalty should be factored in. The recommended penalty of $12,500.00 per breach, represents approximately 66% of the maximum penalty payable. The Court is of the view, given the lack of contrition or corrective action, the extent of the breaches as compared to the annual salary of the applicant that this recommended penalty is indeed appropriate in this matter.
On the basis of $12,500.00 for three breaches, this totals $37,500.00. On the basis of the application of the principle of totality, the Court is prepared to allow a small reduction and reduce the overall penalty payable to $35,000.00. This amount is to be paid within 28 days to the applicant in accordance with s 546(3)(c) of the FW Act.
The Court will hear from the applicant in relation to any costs which had been additionally incurred by reason of the applicant attending the penultimate hearing and then failing to attend the hearing on 15 November in circumstances where the surgical procedure that he undertook would have been required to be scheduled well in advance, and that he failed to advise the court that he would not be available on 15 November.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Associate:
Dated: 29 November 2024
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