Vojnics-Tunics v Jodack Pty Ltd trading as Snap Caulfield South (No 2)
[2024] FedCFamC2G 1221
•14 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Vojnics-Tunics v Jodack Pty Ltd trading as Snap Caulfield South (No 2) [2024] FedCFamC2G 1221
File number(s): MLG 1036 of 2021 Judgment of: JUDGE MANSINI Date of judgment: 14 November 2024 Catchwords: FAIR WORK - Application for compensation, interest, pecuniary penalties and costs. Legislation: Fair Work Act 2009 (Cth) ss.44, 45, 323, 5,35, 536, 545, 547, 550, 557C, 570 Cases cited: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155
Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620
Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Beams Lift Case) (No 2) [2024] FCA 779
Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (The Hutchison Ports Appeal) [2019] FCAFC 69
Fair Work Ombudsman v Grouped Property Services (No 2) [2017] FCA 557
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68
Markarian v The Queen (2005) 228 CLR 357
Royer v Western Australia (2009) 197 A Crim R 319
Ryan v Primesafe (No 2) (2015) 323 ALR 107
Trade Practices Commission v CSR Ltd [1990] FCA 521
Tucker v State of Victoria (No 2) [2021] VSCA 182
Veeraragoo v Goldbreak Holdings (No 2) [2018] FCA 1448
Wong v The Queen (2001) 207 CLR 584
Division: Division 2 General Federal Law Number of paragraphs: 78 Date of last submissions: 5 December 2023 Date of hearing: 15 August 2022 & 14 November 2022 Place: Melbourne Counsel for the Applicant: Mr C Banasik Counsel for the Respondents: Mr C Pym Solicitor for the Respondents: Barry Nilsson Lawyers ORDERS
MLG 1036 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ZSOLT VOJNICS-TUNICS
Applicant
AND: JODACK PTY LTD T/A SNAP CAULFIELD SOUTH
First Respondent
DAVID KEITH CLARKE
Second Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
14 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Within 60 days of these orders, the Respondents pay to the Applicant:
(a)$1,753.79 in compensation for loss suffered because of the First and Second Respondent’s contraventions of the Fair Work Act 2009 (Cth) (Act);
(b)$2,193.47 in interest on the amounts that were required to be paid to the Applicant pursuant to the Act; and
(c)$68,688 in total pecuniary penalties payable for the First and Second Respondent’s contraventions of the Act ($58,608 for the First Respondent’s contraventions and $10,080 for the Second Respondent’s involvement in the First Respondent’s contraventions).
2.There be no order as to costs.
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 MANSINI
Before the Court is a claim for orders of compensation, interest, pecuniary penalties and costs as against the First Respondent and Second Respondent (together, the Respondents) for various contraventions of the Fair Work Act 2009 (Cth) (Act) and breach of contract.
The First Respondent (Jodack Pty Ltd (ACN 081 260 817) (trading as Snap Caufield South)) was a franchisee in the Snap Printing Group - a small printing business located in Caulfield South.
The Second Respondent (Mr David Clarke) was 80 years of age at the time of final submissions and had operated the printing business for some 20 years. He was at all material times the sole director of the First Respondent. He was previously assisted by his late wife in the administration of the business and sought to outsource some functions to third parties.
On or about 28 June 2017, the Applicant (Mr Zsolt Vojnics-Tunics) commenced his employment with the First Respondent in the position of Centre Manager. Together the parties endured the circumstances of the global COVID-19 pandemic and related business restrictions in Victoria and the First Respondent experienced personal hardships affecting his immediate family. The employment ultimately came to an end on 14 December 2020 by reason of serious misconduct involving alleged misappropriation of funds. Since the employment came to an end, the Applicant brought an unfair dismissal claim and separately commenced this proceeding for unpaid wages and other contraventions.
For the reasons delivered on 11 August 2023, the Court made findings of fact including of breach of contract and contraventions of the Act. Declarations were made that:
(a)The First Respondent contravened ss.44, 45, 323, 535 and 536 of the Act by failing to pay the Applicant various entitlements due for work performed and by its failures to give the Applicant payslips and its failures to make and keep records of the Applicant’s employment as required; and
(b)The Second Respondent was involved in the contraventions referred to at (a), within the meaning of s.550 of the Act.
These reasons address the remaining questions as to the appropriate relief (if any) to be ordered.
THE APPLICATION FOR RELIEF
Following delivery of reasons on 11 August 2023, the parties were invited to and subsequently did make further submissions which addressed their respective positions on compensation, interest, penalty and costs.
On 1 July 2024, my chambers was notified that an appeal of part of the 11 August 2023 reasons was discontinued. The parties sought determination of penalty and relief on the basis of the written submissions filed.
Accordingly, this matter proceeds on the basis of findings of fact earlier made and the written submissions filed on 12 October 2023, 27 November 2023 and 5 December 2023.
WHETHER TO ORDER RELIEF
Compensation for declared statutory contraventions
With regard to the reasons of 11 August 2023, the Applicant initially sought orders requiring the Respondents to pay compensation in the amounts of $11,705.11 (by way of gross salary underpayments) and $3,041.35 (by way of gross superannuation underpayments) plus interest to be calculated in accordance with the Federal Court of Australia’s Interest on Judgments Practice Note.
However, at the time of these reasons (and as of 29 November 2023), it was uncontroversial that the Applicant had been paid the gross salary underpayment and part of the claimed superannuation underpayment had been paid to his superannuation account. There remained a claimed amount of $1,753.79 in unpaid superannuation which the Applicant sought be rectified by way of a compensation order plus interest on all underpayment amounts.
The Respondents did not oppose an order for compensation to the value of the residual amount of superannuation. In relation to interest, the Respondents expressly accepted that interest would apply to the non-penalty component as ordered on 11 August 2023 and in accordance with the Federal Court of Australia Practice Note.
Section 545 confers a broad discretion on the Court to make any order that it considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. Without limiting that power, the statute expressly contemplates such order to include an award of compensation for loss that a person has suffered because of the contravention: s.545(2)(b), see also Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620 (Blake J). The Court may order that a person who was involved in a contravention pay compensation: Veeraragoo v Goldbreak Holdings (No 2) [2018] FCA 1448 (Colvin J) at [42]-[54].
As explained in the Court’s reasons of 11 August 2023, the First Respondent contravened and the Second Respondent was involved in its contraventions of s.323 of the Act by failing to pay various entitlements owed to the Applicant. Of the declared underpayments, the amount of $1,753.79 in unpaid superannuation remains outstanding. The compensation order sought directly arises from those contraventions and it may be accepted that the Applicant’s loss was directly occasioned by the Second Respondent’s involvement in the contraventions of s.323.
In relation to interest, s.547(2) of the Act provides that, in making an order in relation to an amount that a person was required to pay to or on behalf of another person under the Act or a fair work instrument (other than a pecuniary penalty order), the Court must on application include an amount of interest unless good cause is shown to the contrary. Without limiting that obligation, the statute also provides that in determining the amount of interest the Court is to take into account the period between the day the relevant cause of action arose and the day the order is made.
Here, the interest would be calculated in accordance with the Federal Court pre-judgement interest rates as follows:
(a)On the gross salary underpayment of $11,705.11 for the period from date of commencement of these proceedings (19 May 2021) to the date that the Applicant was recompensed (29 November 2023) the total amount of interest accrued is equal to $1,629.58.
(b)On the gross superannuation underpayment of $3,041.35 for the period from date of commencement of these proceedings (19 May 2021) to the date that the Applicant was recompensed (29 November 2023) the total amount of interest accrued is equal to $423.41.
(c)For the component of the gross superannuation underpayment amount balance of $1,753.79 which remained outstanding from 30 November 2023 to 14 November 2024 (when these reasons will be delivered) the total amount of interest accrued is equal to $140.09.
In all of the circumstances of the present case, I consider it appropriate that the Second Respondent be ordered to pay compensation in the amount of $1,753.79 to the Applicant plus pre-judgement interest on the amounts that the Respondents were required to pay to the Applicant fixed in the amount of $2,193.47.
Pecuniary penalties
The Applicant sought the imposition of pecuniary penalties for the declared contraventions of the First and Second Respondents totalling $170,550 as against the First Respondent and $34,182 as against the Second Respondent, comprised of the following amounts per declaration of the Court:
Declaration 1 $18,900 against the First Respondent
$3,780 against the Second Respondent
Declaration 2 $22,050 against the First Respondent
$4,410 against the Second Respondent
Declaration 3 $19,800 against the First Respondent
$3,996 against the Second Respondent
Declaration 4 $44,100 against the First Respondent
$8,820 against the Second Respondent
Declaration 5 $19,800 against the First Respondent
$3,996 against the Second Respondent
Declaration 6 $12,600 against the First Respondent
$2,520 against the Second Respondent
Declaration 7 $16,650 against the First Respondent
$3,330 against the Second Respondent
Declaration 8 $16,650 against the First Respondent
$3,330 against the Second Respondent
For their part, the Respondents conceded that some penalty would likely be payable by operation of the Act. However, they contended that the Court should order a modest penalty when regard was had to the factual circumstances of the matter and subject to considerations of general deterrence only.
The Court’s power to impose pecuniary penalties in respect of the established contraventions resides in s.546(1) of the Act.
Section 546(1) permits the Court to impose a pecuniary penalty “that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. Each of ss.44, 45, 323, 535 and 536 of the Act are civil remedy provisions.
For the reasons delivered on 11 August 2023, that state of satisfaction exists. It falls to determine what level of penalty (if any) is appropriate as against the First and/or Second Respondents in light of the established contraventions.
The purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the Act and in (general and specific) deterrence of further contraventions: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 at [15]-[16] (French CJ, Kiefel, Bell, Nettle and Gordon JJ) (Pattinson) citing the plurality in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (French CJ, Kiefel, Bell, Gageler, Keane, Nettle and Gordon JJ) and French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 (CSR Ltd). An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”: Pattinson at [46].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case: Wong v The Queen (2001) 207 CLR 584 at [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen (2005) 228 CLR 357 at [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68 at [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at [44] (Jagot, Yates and Bromwich JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654. The oft cited decision of French J in CSR Ltd at [42] listed those factors relevant to an overall assessment of penalty, restated by the Full Court in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155 (Allsop CJ, White and O’Callaghan JJ) at [20]:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.
This is not an exhaustive list. Further, each case warrants an “idiosyncratic” approach and a careful analysis of all relevant circumstances - as was stated in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 (Gray J) at [12]:
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.
I turn to consider the application for pecuniary penalties in light of those well-established principles.
Nature and deliberateness
The relevant conduct involves the First Respondent’s contraventions of ss.44, 45, 323, 535 and 536 of the Act, in respect of which the Second Respondent was involved within the meaning of s.550. Specifically, pursuant to the factual findings of 11 August 2023, the First Respondent contravened and the Second Respondent was involved in a series of contraventions of the regular payment, payslip and record-keeping obligations in the Act. In summary:
(a)There were 3 declared contraventions of s.323 of the Act:
(i)The contraventions subject of the Court’s first declaration related to underpayments for the Christmas holiday period of December 2018 to January 2019, where the underlying entitlements to pay were for hours worked, public holidays and accrued annual leave together amounting to $2,098.69.
(ii)The contraventions subject of the Court’s second declaration arose from a misplaced reliance on what were then known as “JobKeeper enabling directions” and resulted in underpayment of the Applicant’s salary entitlement in the financial year ending 30 June 2020 amounting to $5,799.31.
(iii)The contraventions subject of the Court’s third declaration arose from a failure to pay personal leave to which the Applicant was entitled and took in December 2020 which the First Respondent erroneously treated as a JobKeeper “stand down” and ultimately resulted in an underpayment of $1,224.36.
(b)The contraventions subject of the Court’s fourth declaration arose from a failure by the First Respondent to ensure that the Applicant was paid employer superannuation contributions to his nominated fund as required by the relevant modern award and in contravention of s.45 of the Act. The Second Respondent had engaged a third party provider to assist with managing this obligation. Nonetheless there was a period of some 2 and a half years in which the Applicant was recipient of $208.18 in employer superannuation contributions and otherwise not at all. The Applicant was then subject of further discrepancies and incorrect superannuation contributions.
(c)The contraventions subject of the fifth declaration related to a failure to pay the Applicant his accrued but unused annual leave upon termination, in contravention of s.90 of the Act which underpayment amounted to $11,066.70.
(d)The contraventions subject of the sixth declaration related to a failure to provide the Applicant with payslips within one working day of paying the Applicant an amount in relation to the performance of work, in contravention of s.536 of the Act. The contraventions occurred on numerous occasions in the period 20 December 2017 to 28 October 2020 and approximately half occurred prior to the workplace restrictions in the State of Victoria associated with the COVID-19 pandemic.
(e)There were 2 declared contraventions of s.535 of the Act:
(i)The contraventions subject of the Court’s seventh declaration related to failures to keep records of annual leave accruals and deductions. Where there were payslips, the annual leave balance was not completed and there were no other records kept.
(ii)The contraventions subject of the Court’s eighth declaration related to failures to keep records of superannuation as required. Where there were records at all, their creation post-dated the employment relationship and did not constitute compliance with the obligations in the relevant modern award.
The quantum of the total underpayments was relatively modest but material and the duration of time in which the various entitlements remained unpaid significant, particularly when considered relative to the Applicant’s annual salary of some $65,000 per annum.
The contraventions subject of the Court’s fourth declaration were deliberate and, in my view, especially serious - including when regard is had to the length of time in which the Applicant was in receipt of no superannuation entitlements at all, during which time the First Respondent or its agents were on notice of the issue. Those issues were only belatedly and sporadically rectified and, for present purposes it may be accepted, resulted in direct loss to the Applicant who was prevented from at least attempting to access to those superannuation entitlements when a personal need arose.
Having regard to the operation of the reverse onus at s.557C, the record-keeping contraventions did not strictly frustrate the Applicant’s successful pursuit of these proceedings but may understandably have prejudiced the parties’ capacity to reach an early resolution.
There was no evidence nor allegation of prior contraventions of the Act on the part of the First Respondent or Second Respondent. This is a relevant factor to take into account in assessing the appropriate penalty (if any) but does not reasonably excuse what are objectively serious and multiple contraventions of the Act. To the extent that the Respondents were ignorant as to their various obligations (such as in respect of JobKeeper directives and stand downs) it ought be observed that ignorance of Australia’s workplace laws is not of itself sufficient excuse for an employer to not familiarise itself with these basic conditions of employment.
Cooperation and contrition
It will be recalled that the circumstances of the Applicant’s dismissal from employment with the First Respondent involved allegations of serious misconduct namely misappropriation of funds. Evidence of a related Victoria Police matter was not before the Court, but a degree of animosity was apparent in the Second Respondent’s evidence and did not tend toward a finding of genuine contrition.
Nonetheless, there was some demonstration of cooperation and endeavours made to right past contraventions in the course of the unfair dismissal proceedings and these proceedings. The rectification of all underpayments excepting part of the unpaid superannuation by 29 November 2023, albeit belated, is a relevant factor to take into account in this respect.
Size, involvement of senior management and financial resources
It was not contentious that the First Respondent was a small business which the Respondents submitted is now “defunct”.
Senior management was involved in each of the declared contraventions.
There were assertions of limited means but no probative evidence of financial resources or circumstances.
Deterrence
The principles and importance of general and specific deterrence are well-established.
There is a need in the present case for general deterrence, to emphasise the importance of the maintenance of effective minimum terms and conditions of employment and adherence to the provisions of industrial instruments.
On what is before the Court, it would appear there is a lesser need for specific deterrence where the Second Respondent is some 80 years of age and it is submitted that the First Respondent business no longer continues in operation.
Course of conduct and totality
The “course of conduct” and “totality” principles are principles or tools that assist the Court in arriving at an appropriate penalty: Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Beams Lift Case) (No 2) [2024] FCA 779 (Snaden J) at [99].
The Act provides that 2 or more contraventions of “a” civil remedy provision may be taken to constitute a single contravention if committed by the same person and the contraventions arose out of a course of conduct by the person: s.557. The statutory course of conduct principle relevantly applies to contraventions of ss.44, 45, 323, 535 and 536 of the Act: s.557(2).
The course of conduct principle recognises that care ought to be taken so that an offender is not punished more than once for what is essentially the same wrongdoing: Royer v Western Australia (2009) 197 A Crim R 319, 328 at [22] (Owen JA, with whom Miller JA agreed in the result, Buss JA dissenting). In assessing what penalty or penalties are appropriate for the contraventions, a court may (but will not necessarily) conclude that a single penalty ought to be imposed for multiple contraventions arising out of a course of conduct: Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (The Hutchison Ports Appeal) [2019] FCAFC 69 at [181] (Rangiah J, with whom Ross J agreed, Flick J dissenting).
The totality principle requires consideration, before imposing anything, of whether the total of the penalties that might be imposed might amount to a disproportionate response to the wrongdoing.
The Respondents contended that all contraventions are properly understood to have arisen from a single course of conduct and should not, therefore, be subject of multiple penalties. That submission must be rejected.
For reasons detailed in the 11 August 2023 judgement and summarised above, in the present case, the First Respondent (and, by his involvement, the Second Respondent) were found to have contravened s.323 on multiple occasions which may be characterised as 3 instances of a common course of conduct. That is, the contraventions arising from each of: the 2018/19 Christmas holiday period (subject of the first declaration); the contraventions related to JobKeeper directives in the financial year ending 20 June 2020 (subject of the second declaration); and the contravention related to the December 2020 personal leave entitlement (subject of the third declaration) were each and of themselves related to a common course of conduct. Yet when the facts and temporal nature of the contraventions subject of declarations 1, 2 and 3 are considered together the contraventions subject of declarations 1, 2 and 3 are not properly characterised as derived from a common course of conduct.
Declarations 4, 5 and 6 respectively related to contraventions of distinct statutory provisions (ss.44, 45 and 536 of the Act). There being no multiplicity of contravention in these respects, the statutory course of conduct cannot be applied.
The present case also involved 2 declarations of contraventions of s.535. The reasons of 11 August 2023 reflect that the underlying source of the various contraventions subject of each of declarations 7 and 8 were a failure to keep records of annual leave (accruals and use) (seventh declaration) and a failure to keep records of superannuation contributions (eighth declaration). The underlying obligations to keep those records are separate and distinct. The contraventions subject of declarations 7 and 8 are not properly characterised as derived from a common course of conduct.
However, it is appropriate for the Court to fashion penalties that, in their totality, reflect the wrongdoing of the Respondents. Totality, rather than course of conduct, is the best way to make sure that what is imposed upon the First Respondent and the Second Respondent fairly reflects what is needed to deter future instances of like wrongdoing.
Resolution – penalties
Turning then to what level of pecuniary penalty (if any) is appropriate as against the First Respondent for its contraventions of ss.44, 45, 323, 535 and 536 of the Act and, by his involvement in those contraventions, the Second Respondent.
Taking into account the common course of conduct where applicable, it remains the case that there are 8 separate contraventions of the Act.
The contraventions spanned a period of 1 July 2018 to 14 December 2020. The value of a penalty unit increased during the period of the contraventions, from $210 to $222 from 1 July 2020. The higher penalty unit is that to be applied but it is open for the Court to take into account the fact of the increase in penalty having taken place during the currency of the conspiracy in fixing the penalty: Fair Work Ombudsman v Grouped Property Services (No 2) [2017] FCA 557 (Katzmann J) at [396]-[398].
As a company, the maximum penalty for each of the contraventions is 300 penalty units, equalling a maximum penalty of $63,000 for each contravention that occurred prior to 1 July 2020 and $66,600 for each contravention thereafter.
As an individual, the maximum penalty for each of the contraventions is 60 penalty units, equalling a maximum penalty of $12,600 for each contravention that occurred prior to 1 July 2020 and $13,320 for each contravention thereafter.
The Respondents drew the Court’s attention to the consideration in New Shanghai Charlestown at [210] and [213] regarding the principle that, whilst the contraventions of a company and a natural person are distinct contraventions, the ultimate penalty to be imposed may be reduced to reflect the risk of imposing a “double penalty” on the same party. That is a relevant consideration in this matter, where the Second Respondent is the sole director of the First Respondent company and therefore the only natural person standing behind the company.
In weighing all of the relevant factors outlined above, including to take into account that an increase in penalty took place during the period of some of the subject contraventions and in applying a discount on account of the fact that the Second Respondent is sole director and the only natural person behind the company, I am satisfied that it is appropriate to impose pecuniary penalties on the Respondents as follows:
(a)$6,660 for each of the First Respondent’s contraventions subject of the Court’s declarations 1, 2 and 3;
(b)$46,620 for the First Respondent’s contravention subject of the Court’s declaration 4;
(c)$5,328 for each of the First Respondent’s contraventions subject of the Court’s declarations 5, 6, 7 and 8;
(d)$10,080 for the Second Respondent’s involvement in the contraventions subject of the Court’s declarations 1 to 8, pursuant to declaration 9;
(totalling $68,688 in penalties, of which $58,608 are to be ordered as against the First Respondent).
Having considered them in their totality, the penalty arrived at in each case is a proportionate response to the respective contraventions and strikes a reasonable balance between oppressive severity and the need for deterrence in this particular case. It is appropriate that they be paid to the Applicant, within 60 days.
Costs
The Applicant also sought an order for his costs of the proceeding “on a standard basis”, on account of the Respondents’ unreasonable withdrawals of admissions, attempts to introduce irrelevant evidence and acts which resulted in delayed determination. For this, the Applicant tabled an itemised breakdown of his costs sought in the total amount of $32,315.12.
The Respondents contended that no costs should be ordered in the matter. They highlighted that costs in this Fair Work jurisdiction are the exception not the rule, citing Mortimer J in Ryan v Primesafe (No 2) (2015) 323 ALR 107 (Primesafe) at [64]:
The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them.
There is a general rule that a party to a proceeding will bear their own costs. The statute provides that a party may be ordered to pay costs incurred by another party - but only in circumstances provided at s.570(2). Relevantly, if the Court is satisfied that a party’s unreasonable act or omission unnecessarily caused the other party to incur the costs: s.570(2)(b).
The authorities make clear that the discretion afforded by s.570(2) should be exercised cautiously and the case for its exercise should be clear: see Tucker v State of Victoria (No 2) [2021] VSCA 182 (Tucker); Primesafe at [64]-[68].
In Tucker, at [32], a Full Court of the Supreme Court of Victoria held that the following principles apply in the case of s.570(2)(b):
(a) Paragraph (b) is enlivened when two criteria are satisfied:
(i) one party has engaged in an ‘unreasonable act or omission’; and
(ii) that unreasonable act or omission has caused the other party to incur costs.
(b) Unreasonableness is to be determined objectively. It is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case.
(c) Unreasonableness is not to be confused with negligence or inefficiency. A failure to conduct litigation in the most efficient way does not, without more, enliven the paragraph. The fact that a party has conducted litigation inefficiently, made belated concessions, or adopted a misguided approach may be relevant to, but will not be conclusive of, the question of unreasonableness.
(footnotes omitted)
Whether an act is unreasonable requires an assessment of all the circumstances. I turn to consider each alleged unreasonable act or omission in turn.
Withdrawal of admissions
In their initial defences filed 4 August 2021, the Respondents objected to the original statement of claim in respect of base salary, bonus and superannuation on the basis that it failed to plead material facts and was embarrassing. But, under cover of those objections, the Respondents had relevantly:
(a)admitted that the Applicant was underpaid in respect of base salary, disputed the date range and quantum and admitted to contraventions of s.323 of the Act; and
(b)admitted that it had failed to make some superannuation contributions.
In their initial defences, the Respondents also foreshadowed that they were conducting a detailed review and intended to write to the Applicant setting out their calculations of any outstanding amounts owed by 31 August 2021, well in advance of mediation. The Applicant said he never received such correspondence.
The Court subsequently ordered that the parties file amended pleadings and the Respondents were to do so by 4.00 pm on 4 March 2022. By their amended defences filed 7 March 2022, the Respondents had withdrawn the above-mentioned admissions. In the judgement of 11 August 2023, the Court ultimately found and declared contraventions of s.323 in respect of base salary and contraventions of s.45 in respect of superannuation but did not find any contravention of s.323 of the Act in relation to the bonus pay claim.
The amended defences were filed 3 days late, and not in strict compliance with Court orders however this was well in advance of the trial. The Respondents were not expressly granted leave but were ultimately allowed to proceed on the basis of their amended defences (where such liberty to enhance their pleadings was afforded to both parties throughout the proceedings). In circumstances where the Applicant was permitted to and did file an amended statement of claim, the Respondents were entitled to respond by way of pleading. I do not consider the withdrawal of the identified conditional admissions in the course of that exercise (albeit belated) to be an unreasonable act within the meaning of the established authorities.
For completeness, the Respondents’ delay in calculation and rectification of amounts owed to the Applicant is a matter that has been taken into account in an assessment of pecuniary penalty and, in the particular circumstances, is not a matter that is persuasive in the exercise of my discretion as to whether to order costs pursuant to s.570(2).
Irrelevant evidence
On 30 May 2022, there was an interlocutory hearing on initiation of the Applicant regarding the Respondents’ attempt to file evidence associated with a police investigation and the allegations of serious misconduct which were the reason for the Applicant’s dismissal. The Applicant succeeded in the application and costs of that interlocutory application were reserved.
It was not disputed that the Applicant brought the application in a proceeding on 4 April 2022 because the Respondents had not pleaded the allegations subject of the evidence as a set off or counter claim. It was also not disputed that the Respondents were on notice prior to filing their evidence (and at least as of a directions hearing on 16 December 2021) that the allegations needed to be pleaded in order to adduce such evidence.
However, for their part, the Respondents said that the Applicant sought to “make a mountain” of a matter that was subject of genuine dispute which is not a basis for an award of costs.
The Applicant has properly highlighted that the Respondents ought to have sought to introduce the allegations to which the subject evidence related by making a cross claim in accordance with the Court’s rules. However, as the Full Court in Tucker sought to emphasise, the fact of an inefficient or a misguided approach to the litigation is not sufficient to enliven the discretion at s.570(2)(b).
For completeness, the Court was taken to a text on costs for the proposition that the party alleging but failing to prove fraud is deprived of costs even if successful in the action generally: Law of Costs G E Dal Pont, 4th ed, Lexis Nexis Butterworths 2018 at [8.60]. That reference is properly viewed in the context of this Fair Work jurisdiction and its specific statutory limitation on ordinary principles as to award of costs, in which context it provides limited assistance.
The Respondents were, ultimately, entitled to seek to bring the subject evidence before the Court and the Applicant was equally entitled to exercise his right to oppose it as he did. The fact that the Applicant succeeded in his challenge does not in these circumstances render the Respondents act of itself unreasonable in the sense contemplated on the established authorities.
Procedural delay
The Applicant identified the following instances of delay occasioned on the part of the Respondents despite their reasonable attempts made to follow up with the Respondents’ representative:
(a)Respondents’ response filed approximately 4 weeks late, on 4 August 2021 (ordered to be filed by 9 July 2021);
(b)Respondent’s list of documents filed many months late which led to an adjournment of the mediation scheduled for 21 September 2021;
(c)Following the mediation, in November and December 2021, there was a change to the Respondents’ counsel and an absence of response to correspondence of the Court and the Applicant’s representative to arrange a discussion regarding consent to future timetabling, ultimately requiring a directions hearing on 16 December 2021;
(d)The Respondents’ non-compliance with the procedural orders of 16 December 2021 which led to the trial date of 2 February 2022 being vacated.
The Respondents were not understood to oppose the accuracy of the above assertions but submitted that “the same goes” (understood to be a reiteration of their other submissions that costs ought not be ordered in the present case).
The delay in the matter is unfortunate indeed. When all the circumstances are considered, I do not consider the identified instances of tardy attention to case preparation and case management to be so unreasonable as to meet the high hurdle set by s.570(2)(b).
Resolution – costs
I am not minded to exercise the discretion in this case and there will be no order made as to costs.
DISPOSITION
For the above reasons, I will make orders for payment of compensation, interest and pecuniary penalties in the above specified amounts. There will be no order as to costs and the application is otherwise dismissed.
I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 14 November 2024
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