2024 WAIRC 00128

WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT


CITATION : 2024 WAIRC 00128

CORAM : INDUSTRIAL MAGISTRATE T. KUCERA

HEARD : MONDAY, 29 JANUARY 2024

DELIVERED : MONDAY, 25 MARCH 2024

FILE NO. : M 99 OF 2023

BETWEEN : AMY GARDOS
CLAIMANT

AND

ANTHONY BAKER
RESPONDENT

CatchWords : Imposition of pecuniary penalty – Failure to comply with compliance notice – Whether financial difficulty constitutes a reasonable excuse – Principles considered when determining penalty – Where respondent has not shown remorse or taken corrective action
Legislation : Industrial Relations Act 1979 (WA)
Fair Work Act 2009 (Cth)
Instrument : Building Trades (Construction) Award 1987
Case(s) referred
to in reasons: : Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833
Fair Work Ombudsman v Pacific Security Services Pty Ltd [2021] FedCFamC2G 111
Potter v Fair Work Ombudsman [2014] FCA 187
Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832
Fair Work Ombudsman v DB Richardson Trading Pty Ltd (No 2) [2023] FedCFamC2G 203
Fair Work Ombudsman v Dale [2023] FedCFamC2G 183
Trade Practices Commission v CSR Limited [1990] FCA 762
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450
Callan v Smith [2021] WAIRC 00216; 101 WAIG 1155
Australian Ophthalmic Supplies Pty Ltd v McAlarySmith [2008] FCAFC 8; 165 FCR 560
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2018] FCA 1563
Fair Work Ombudsman v Conn & Ors [2010] FMCA 828
Kelly v Fitzpatrick [2007] FCA 1080
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Ponzio v B&P Caelli Constructions Pty Ltd [2007] FCAFC 65; 158 FCR 543
CPSU, the Community and Public Sector Union v Telstra Corporation Limited [2001] FCA 1364; 108 IR 228
Fair Work Ombudsman v Jooine (Investment) Pty Ltd & Anor [2013] FCCA 2144
Commissioner of Taxation v Arnold (No 2) [2015] FCA 34; 324 ALR 59
Fair Work Ombudsman v Darrell Crouch and Associates Pty Ltd [2023] FedCFamC2G 80
Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; 177 IR 337
Shop Distributive & Allied Employees Association v Baljit Kaur Pty Ltd [2024] WAIRC 00040
Result : Contravention proved, penalty imposed
Representation:
Claimant : Mr M McIlwaine (of counsel) as instructed by the State Solicitor’s Office
Respondent : Anthony Baker (in person)
REASONS FOR DECISION
1 This decision deals with the imposition of a pecuniary penalty for an employer’s failure to comply with a compliance notice that was issued by an industrial inspector.
Background
2 The claimant in this matter (Ms Amy Gardos) is an industrial inspector designated pursuant to s 98(1) of the Industrial Relations Act 1979 (WA) (IR Act), who is employed by the Department of Energy, Mines, Industry Regulation and Safety (Department).
3 Anthony Baker is the respondent in this matter (respondent). He operated a small carpentry business under the name ‘Integrity Built’. The respondent employed Mr Aravinda Cohen as an apprentice carpenter (Mr Cohen).
4 Following an investigation into a complaint Mr Cohen made to the Department, the claimant formed a reasonable belief that the respondent had been underpaying Mr Cohen contrary to the terms of the Building Trades (Construction) Award 1987 (Award).
5 To recover the amount by which the Department says Mr Cohen was underpaid, the claimant on 17 February 2023, issued the respondent a compliance notice under s 84Q of the IR Act (compliance notice).
6 Specifically, the compliance notice required the respondent to pay Mr Cohen the sum of $10,722.87, together with a further sum for unpaid superannuation. In total, the amount the respondent was liable to pay Mr Cohen was the sum of $11,617.41 (underpayment). The date by which the respondent had to provide evidence he had complied with the compliance notice was 17 March 2023 (due date).
7 On 14 March 2023, the respondent contacted the claimant to advise that he did not have the money to pay Mr Cohen for the underpayment and that as a result, he would not be able to comply with the terms of the compliance notice by the due date. Following this, the respondent failed to pay Mr Cohen as required by the compliance notice.
8 On 5 April 2023, Mr Paul Callaghan, the Department’s General Manager of Compliance (Mr Callaghan) wrote to the respondent regarding his failure to comply with the compliance notice. In his letter, Mr Callaghan gave the respondent a further four weeks until 17 April 2023, to either comply with the compliance notice or to provide a reasonable excuse for any noncompliance.
9 Mr Callaghan advised the respondent the Department did not accept that financial difficulties provided a reasonable excuse for not complying with a compliance notice.
10 On 17 April 2023, the respondent sent an email to Mr Callaghan in which he again advised that he was not able to pay Mr Cohen. To date, the respondent has not made steps to rectify the underpayment. The respondent maintains that he cannot afford to do so.
Proceedings commenced in the Industrial Magistrates Court
11 Following the respondent’s email to Mr Callaghan, the claimant on 21 August 2023, filed an originating claim under s 83E of the IR Act, alleging the respondent had contravened s 84T of the IR Act, without reasonable excuse, by failing to comply with the compliance notice by the due date (claim).
12 On 21 September 2023, the respondent filed a Form 2 response to the claim. In his response, the respondent admitted to the underpayment and that he had not complied with the compliance notice. He did not however consent to the imposition of a penalty for not complying with the compliance notice or to the issuance of other orders the claimant sought.
First initial hearing
13 The claim was listed for an initial hearing on 23 October 2023. On this date, the respondent appeared in person and was unrepresented. Mr David Anderson of counsel (Mr Anderson), from the State Solicitors Office (SSO), appeared for the claimant.
14 During the initial hearing, counsel for the claimant acknowledged the primary purpose of the claim was to rectify the underpayment.
15 The first initial hearing was concluded, with the matter being adjourned for four weeks. This was for the respondent to hold discussions with the Department on whether a payment plan could be reached to resolve the underpayment. The claim was also adjourned for the respondent to obtain legal and/or financial advice.
16 The respondent was warned during the initial hearing, that a continued failure on his part to rectify the underpayment, would be a relevant matter that would be considered by the Court in the event the contravention of s 84T of the IR Act was proved and a penalty was imposed.
Second initial hearing
17 On 20 November 2023, a second initial hearing was held in relation to the claim. The respondent appeared by telephone and was unrepresented. Mr Anderson continued to appear for the claimant.
18 During the second initial hearing, the parties confirmed there was no progress regarding the rectification of the underpayment. Mr Anderson submitted that an enforceable agreement on the terms of a payment plan was unable to be reached.
19 The respondent said the reason he had not complied with the compliance notice or taken steps to rectify the underpayment was because he did not have the money to pay, and that in his view, his inability to pay provided a reasonable excuse for this.
20 Noting this submission, the second initial hearing was adjourned to a final hearing on the following matters:
(a) whether financial difficulty/incapacity to pay, gives rise to a reasonable excuse under s 84T of the IR Act for non-compliance; and
(b) if the contravention of s 84T is proved, whether and what pecuniary penalty should be imposed.
21 To this end, the following programming orders were made:
1. The respondent is to file and serve a witness statement, attached to a Form 29 – Multipurpose Form, in response to the claim which is to include evidence on his current financial capacity by 18 December 2023.
2. The claimant is to file an outline of submissions on penalty and what constitutes a reasonable excuse for the purposes of section 84T(3) of the Industrial Relations Act 1979 (WA), together with a Form 29 – Multipurpose Form, by 15 January 2024.
3. The respondent is to file any outline of submissions in reply to the claimant’s submissions, together with a Form 29 – Multipurpose Form, by 22 January 2024.
4. The claim is otherwise adjourned for hearing to Monday 29 January 2024.
5. There be liberty to apply.
22 During the second initial hearing the respondent was again warned that a continued failure on his part to rectify the underpayment, would be a relevant matter that would be considered by the Court in the event the contravention of s 84T of the IR Act was proved and a penalty was imposed.
Final Hearing
23 A final hearing was held in relation to the claim on 29 January 2024. The respondent appeared in person and was unrepresented. The SSO continued to represent the claimant, however, Mr Michael McIlwaine of counsel (Mr McIlwaine), appeared in the place of Mr Anderson.
24 Prior to the final hearing, the claimant filed and served an outline of submissions on the issue of what constitutes a reasonable excuse for not complying with a compliance notice and on the appropriate penalty to be imposed.
25 While Mr McIlwaine made some short further points during the final hearing, he was, in the main, content to rely upon his written outline.
26 The respondent for his part did not file any written materials. He instead provided the Court with a copy of his bank statements for the period 6 September 2023  6 November 2023 (bank statements). The respondent sought to rely upon the bank statements to show that he did not have the capacity to either pay a fine or Mr Cohen.
27 During the final hearing, the respondent confirmed he had seen the submissions from the SSO. He also said he did not wish to make any further submissions in reply.
28 At the conclusion of the final hearing, I reserved my decision for the purposes of preparing the reasons that follow.
Compliance notices
29 The provisions of the IR Act relevant to the claim, appear under ss 84Q, 84S and 84T of the IR Act.
30 Section 84Q of the IR Act deals with the power of an industrial inspector to issue a compliance notice. The provision also sets out what a compliance notice must contain, as extracted below:
84Q.Giving compliance notice
(1) Except as provided in section 84R, the industrial inspector may give the person a notice (a compliance notice) requiring the person to do either or both of the following within a reasonable time specified in the notice —
(a) take specified action to remedy the direct effects of the contravention;
(b) produce reasonable evidence of the person’s compliance with the notice.
(2) The compliance notice must also set out all of the following —
(a) the name of the person to whom the notice is given;
(b) the name of the industrial inspector who gave the notice;
(c) brief details of the contravention;
(d) an explanation that a failure to comply with the notice may contravene a civil penalty provision;
(e) an explanation that the person may apply to the industrial magistrate’s court for a review of the notice on either or both of the following grounds —
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (1) or this subsection;
(f) any other matters prescribed by the regulations.
Purpose and benefit of compliance notices
31 The purpose of compliance notices is to provide industrial inspectors with an efficient means to achieve compliance with the provisions of industrial awards and other employment standards, and to provide employees with a quick mechanism to secure their unpaid entitlements. Compliance notices are an alternative to enforcement proceedings under s 83 of the IR Act.
32 The benefit to employers in complying with a compliance notice is twofold. Firstly, an employer that complies with a compliance notice will not face further proceedings in respect of the underlying contraventions of awards or statutes, the subject of a compliance notice. This is because the claimant under s 84S(1) the IR Act is prevented from pursuing enforcement proceedings under s 83 where those matters, the subject of compliance notice are rectified.
33 Secondly, a complying employer will not, as a result of s 84S(2) of the IR Act, be taken to have admitted or contravened the underlying contraventions that are the subject of the compliance notice.
Penalty for non-compliance
34 Section 84T of the IR Act deals with what happens when a person does not comply with a validly issued compliance notice. The provision relevantly states:
84T. Person must comply with compliance notice
(1) A person must comply with a compliance notice.
(2) A contravention of subsection (1) is not an offence but the subsection is a civil penalty provision for the purposes of section 83E, except that the pecuniary penalty cannot exceed —
(a) in the case of a body corporate — $30 000;
(b) in the case of an individual — $6 000.
(3) Subsection (1) does not apply if the person has a reasonable excuse.
Reasonable excuse
35 It is clear the inclusion of the term ‘reasonable excuse’ is intended to provide a non-complying employer with a potential defence to an alleged failure to comply. This is despite the IR Act not containing a definition of ‘reasonable excuse’ that appears in s 84T.
36 An interpretation of these words when used in a comparable context is not without precedent. Subsections 84T(1) and (3) are cast in near identical terms to subsections 716(5) and (6) of the Fair Work Act 2009 (Cth) (FW Act) which also contains provisions for the issuance of compliance notices and pecuniary penalties where they are not met.
37 While the FW Act does not contain a definition of ‘reasonable excuse’ either, there are relevant cases, where this defence, in the same terms, was judicially considered.
38 In Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833 at [49] and [109] Forbes J held the excuse provided must be one which would be regarded as reasonable, by the reasonable person in all the relevant circumstances. It is a matter to be determined objectively by the court having regard to all the evidence. Fair Work Ombudsman v ANSA Finance Pty Ltd at [147].

39 In Fair Work Ombudsman v Pacific Security Services Pty Ltd [2021] FedCFamC2G 111 at [49] citing Potter v Fair Work Ombudsman [2014] FCA 187 at [72], Blake J, held that a person seeking to argue that they have a reasonable excuse for non-compliance with a compliance notice, bears the onus of proof. Blake J concluded a reasonable excuse cannot be established without evidence.
40 However, even where evidence of financial challenges is provided as the excuse, the courts have held that financial difficulty does not excuse an employer of obligations to comply with workplace laws, including the requirement to comply with obligations under an award or compliance notices: see Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 at [50] also see Fair Work Ombudsman v DB Richardson Trading Pty Ltd (No 2) [2023] FedCFamC2G 203 at [44], and Fair Work Ombudsman v Dale [2023] FedCFamC2G 183 at [49].
41 While the line of authority I have referred to has been developed in the context of the FW Act, noting the similarity of the provisions with the IR Act and having regard to the purpose of both statutory schemes; compliance with minimum employment standards, the reasoning from these cases is equally applicable in the context of the IR Act.
Consideration – the excuse the respondent provided
42 The respondent relies upon financial difficulty/incapacity to pay as his excuse for his failure to comply with the compliance notice. As I indicated in the preceding paragraph 26, the bank statements were the only materials the respondent provided as evidence of this excuse.
43 The respondent says the bank statements show the money he has coming in now, only just covers his weekly outgoings. To this end, the respondent relies upon the bank statements to say he still does not have the money to pay Mr Cohen.
44 While the respondent said the reason for his financial difficulty is because the builder he was previously working for had not paid him, there were far too many points to this explanation that were not dealt with in evidence.
45 For example, the respondent did not explain why his business was not paid for the services it provided. The respondent did not provide any evidence of the steps (if any) he had taken to recover monies from the builder he says had not paid him.
46 The respondent also did not give any evidence about whether those monies were likely to be received and if so, whether they would be quarantined to pay Mr Cohen.
47 Mr McIlwaine submitted the bank statements did not provide any evidence of financial incapacity at the point in time the respondent failed to comply with the compliance notice. For this reason he submitted the bank statements were irrelevant to the excuse the respondent provided for his non-compliance.
48 As hard as this may be for the respondent to swallow, I am inclined to agree with the claimant’s submissions on this point.
49 Noting the authorities I have referred to in the preceding paragraph 40, the respondent has not provided the Court with any evidence that distinguishes his situation from similar cases where financial difficulty was rejected as a reasonable excuse for not complying with workplace laws.
50 Further, while copies of the bank statements may shed some light on the current state of the respondent’s finances, they do not provide any evidence of what was happening in his business at the time he originally failed to comply with the compliance notice.
51 In the circumstances, I conclude the respondent has not discharged the onus to show he has a reasonable excuse for his failure to comply with a compliance notice. Accordingly, I find the contravention of s 84T of the IR Act is proven. I now turn to the penalty to be imposed.
Matters to be considered when determining penalty
52 The primary purpose of pecuniary penalties under a statute such as the IR Act, is to secure compliance with the provisions of the statutory regime: see French J in Trade Practices Commission v CSR Limited [1990] FCA 762. French J in Trade Practices Commission v CSR Limited [1990] FCA 762; (1991) 13 ATPR 41-076, was cited with approval in Callan v Smith [2021] WAIRC 00216; 101 WAIG 1155 at [30].

53 As the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson) said at [66]:
… the financial disincentive involved in the imposition of a pecuniary penalty will encourage compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice.
54 Noting the purpose of pecuniary penalties is to secure compliance with the provisions of a statutory regime, the Court is required to set a penalty to an appropriate level that will have the effect of deterring a contravener from engaging in the same or similar conduct. Shop Distributive & Allied Employees Association v Baljit Kaur Pty Ltd [2024] WAIRC 00040 at [46].

55 The factors which inform an assessment of a civil penalty with an appropriate deterrent value, were described by the High Court in Pattinson at [18]. The considerations described are consistent with and much the same as those set out in Callan v Smith [2021] WAIRC 00216; 101 WAIG 1155 (Callan v Smith).
56 In Callan v Smith, a Full Bench of the Western Australian Industrial Relations Commission observed that when determining penalty, the court is required to have regard to a nonexhaustive range of considerations when deciding if particular conduct calls for the imposition of a penalty, and if it does, the amount of a penalty. Callan v Smith at [90].

57 The following considerations were set out in Callan v Smith at [90], which include but are not limited to:
(a) the nature and extent of the conduct which led to the breaches;
(b) the circumstances in which that conduct took place;
(c) the nature and extent of any loss or damage sustained, as a result, of the breaches;
(d) whether there had been similar previous conduct by the respondent;
(e) whether the breaches are properly distinct or arose out of the one course of conduct;
(f) the size of the business enterprise involved;
(g) whether or not the breaches were deliberate;
(h) whether senior management was involved in the breaches;
(i) whether the party committing the breach had exhibited contrition;
(j) whether the party committing the breach had taken corrective action;
(k) whether the party committing the breach had cooperated with the enforcement authorities;
(l) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m) the need for specific and general deterrence.
58 Citing the decision in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560, the Full Bench in Callan v Smith at [91] observed the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.
59 A further consideration is the maximum penalty identified in the statute for the contravention. As Flick J stated in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2018] FCA 1563 at [19]:
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a 'yardstick' against which the assessment of penalties is generally to proceed.
60 The High Court in Pattinson noted the list of considerations when determining penalty is not a rigid catalogue of matters for attention. Relevantly at [19] the majority concluded:
It is important, however, not to regard the list of possible relevant considerations as a 'rigid catalogue of matters for attention' as if it were a legal checklist. The court’s task remains to determine what is an 'appropriate' penalty in the circumstances of the particular case. (footnotes omitted)
61 In determining the penalty to be imposed, I have had regard to each of these factors. My findings in respect of the criteria are set out in the paragraphs below.
Nature and extent of the conduct
62 This matter involves a single contravention of the IR Act for which the maximum penalty that may be imposed is a fine of $6,000.
63 The respondent acknowledged receiving the compliance notice, was aware of its requirements and that his noncompliance would result in enforcement proceedings being commenced against him. Despite this, the respondent failed to comply with the compliance notice.
64 In the circumstances, I can only conclude the respondent made a deliberate choice not to comply with the compliance notice.
Circumstances in which the conduct occurred
65 The circumstances which led to the issuance of the compliance notice commenced with Mr Cohen making a complaint to the Department in 2022. One of the matters giving rise to the complaint was the respondent’s failure to pay Mr Cohen his wages for a number of weeks.
66 Upon its investigation of Mr Cohen’s complaint, the claimant identified a large number of potential contraventions of the Award. However, rather than commence enforcement proceedings, the claimant opted to pursue the matter by issuing a compliance notice.
67 Mr Cohen was one of two apprentices, under the respondent’s supervision. Together, they worked as a carpentry team. I accept the claimant’s submission that aside from the respondent’s responsibility as an employer to comply with his award obligations, the respondent was himself a tradesperson, who would have completed an apprenticeship in the building and construction industry.
68 It is reasonable to conclude that from his industry and trades experience, the respondent should have been aware of the type and number of award entitlements payable to employees and apprentices. Further, he should have taken due care to ensure these minimum entitlements were being paid to Mr Cohen.
Nature and extent of the loss
69 I accept the respondent’s failure to comply with the compliance notice has resulted in the continued underpayment of Mr Cohen’s lawful entitlements. At the time Mr Cohen worked for the respondent he was 20 and 21 years of age.
70 It is trite that young workers, particularly apprentices, are vulnerable in the workplace. The total amount of the underpayment is $11,617.41 which includes $894.53 in unpaid superannuation entitlements. For any employee, this is a large sum.
71 For a firstyear apprentice who is already receiving a lower rate of pay to account for his trainee status, this level of underpayment is serious.
Previous conduct
72 There is no evidence the respondent has previously been found to have engaged in similar conduct or that he has underpaid employees before. It is on this basis, I am minded to conclude the contravention should be treated as the first of its type.
No corrective action
73 There is no dispute the respondent has not made any steps to rectify the underpayment. Mr Cohen has now been deprived of his entitlements for more than two and a half years.
74 The respondent was warned on the two occasions he appeared in Court before the final hearing, that his continued failure to rectify the underpayment would have a bearing on the level of penalty that could be imposed for his failure to comply with the compliance notice.
75 Regrettably, and despite being warned of these consequences, the respondent has not taken any action to rectify the underpayment and so there is little that can be viewed in the respondent’s favour on this point.
76 The respondent’s apprentice remains out of pocket and the respondent has done nothing to resolve this.
Remorse and contrition
77 The respondent has not expressed any remorse or demonstrated contrition for his conduct. This much is demonstrated by his failure to take any steps to rectify the underpayment.
78 I accept the claimant’s submission that while the respondent has been at pains to labour his own financial misfortune, he is yet to acknowledge and express regret for the financial loss Mr Cohen has suffered through no fault of his own.
79 The respondent’s lack of remorse or contrition is concerning for another reason. The respondent is only 39 years of age and so it is possible he could try and reopen his business.
80 Having shown no contrition for the contravention; there is a risk he could engage in future contravening conduct, a point to which I will return when dealing with general and specific deterrence.
The involvement of senior management in the contravention
81 The respondent was the senior and only manager in the business. He was responsible for ensuring that both the Award and the compliance notice were complied with.
82 While the respondent had engaged a bookkeeper to pay his employees, the responsibility to ensure Mr Cohen was paid correctly and in accordance with the Award, fell to the respondent.
83 In relation to this, I have already commented upon what the respondent ought to have known from his own experience as a tradesman, regarding the type and number of award entitlements payable to employees under the Award.
84 If the respondent was in any way unsure about the award that applied, he ought to have made proper checks. There was no evidence as to what the respondent had done to check which award applied or that he was paying Mr Cohen correctly.
The size of the business involved
85 There is little doubt the respondent was operating a small business. While some latitude may, in appropriate circumstances, be given to small business owners by way of mitigation when determining penalty, it should not be viewed as an automatic discounting factor on penalty.
86 In Fair Work Ombudsman v Conn & Ors [2010] FMCA 828 at [66] Burnett FM held the size and financial resources of a business should not impact upon employers’ obligations to comply with workplace employment laws. The mere fact a business may be small should not absolve an employer of its obligation to comply with the law in relation to the employment of its employees.
87 In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [28], Tracey J of the Federal Court held:
The respondents have expressed contrition and have put in place mechanisms which are designed to ensure that there will be no repetition of the breaches which have led to the present proceeding. Specific deterrence does not, therefore, loom large as a consideration in determining penalty. It does not follow that the need for general deterrence may be disregarded. As Finkelstein J said in CPSU v Telstra Corporation Limited (2001) 108 IR 228 at 231: “even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct …” No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level”: see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 at [13].
88 Noting the respondent’s lack of contrition and that he has not taken any corrective action, this is not a case in which the size of the respondent’s business gives rise to anything in mitigation.
89 On the contrary, I hold concerns that without a greater effort at compliance and the imposition of a significant penalty, there is a real risk the respondent could engage in further contravening behaviour if he reopens his business.
Cooperation with enforcement authorities
90 By filing a Form 2 response in which the respondent partially admitted the claim, the respondent has relieved the claimant of the costs and resources that would be incurred in a contested hearing.
91 The respondent also cooperated with the claimant during the investigation of Mr Cohen’s complaint. While the respondent’s cooperation in his dealings with the Department and in the admissions he made, should be viewed to his benefit, his lack of contrition and the fact he has not taken corrective action weighs against him.
Enforcing compliance with minimum standards
92 I earlier observed that the purpose of compliance notices is to provide industrial inspectors with an efficient means to achieve compliance with industrial awards and other minimum employment standards.
93 I accept the claimant’s submission that the respondent’s failure to comply with the compliance notice has the potential to undermine the utility and function of compliance notices as a mechanism to ensure awards and other workplace laws are adhered to.
94 In Fair Work Ombudsman v Viper Industries Pty Ltd & Anor [2015] FCCA 492 at [42], Emmet J held a respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator was conduct that undermined the utility and effectiveness of the FW Act’s object to enforce minimum employment standards. Emmet J further noted a respondent’s failure to comply undermines and frustrates the powers conferred on workplace inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. This reasoning is applicable to the present case.
Special and general deterrence
95 Although the respondent says he has closed his business down, as I indicated in the preceding paragraph 80, I hold concerns the respondent could engage in similar conduct in the future if he reopens his business. The respondent’s failure to express any remorse or contrition, or to take any steps to rectify the underpayment, has done nothing to convince me otherwise.
96 For this reason and having regard to my finding the respondent’s breach of s 84T of the IR Act was deliberate, it is my view that a penalty must be set that will deter this respondent from repeating or engaging in similar contravening conduct.
97 On the issue of general deterrence, the authorities I have referred to make it clear that a fine must be set sufficiently high that it will not only deter the respondent from engaging in further contravening conduct, but others involved in or contemplating taking a similar path, from doing the same.
98 The penalty cannot be so low that it will be viewed by the respondent or others as an acceptable cost of doing business: Pattinson at [98].
99 The penalty should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations: Ponzio v B&P Caelli Constructions Pty Ltd [2007] FCAFC 65; 158 FCR 543 at [93].
100 In CPSU, the Community and Public Sector Union v Telstra Corporation Limited [2001] FCA 1364; 108 IR 228 at [9] Finkelstein J observed that even if there be no need for specific deterrence, there will be occasions where general deterrence must take priority and, in that case, a penalty should be imposed to mark the law’s disapproval of the conduct in question and to act as a warning to others not to engage in similar conduct.
101 In my view, this case falls into the category of cases which Finkelstein J has described. While there is every likelihood the respondent will not go back into business, in which case the necessity to invoke specific deterrence to prevent future contraventions reduces, the respondent’s noncompliance cannot be without consequence because of the message it will send to other small businesses, who may be contemplating engaging in the same or similar conduct.
102 One of the purposes of workplace laws is to ensure all employees receive a minimum set of employee entitlements, particularly those in vulnerable or lowincome roles. The laws are also intended to ensure there is a level playing field of minimum conditions that must be met by employers across industries in respect of their employment costs: see Fair Work Ombudsman v Jooine (Investment) Pty Ltd & Anor [2013] FCCA 2144 at [26].
103 An employer who does not pay in line with an award standard, would obtain a price advantage over an employer that does. It is trite that such practices represent a race to the bottom, which not only has the potential to undermine the wages and working conditions but the viability of an industry as well.
104 I agree with the claimant that the penalty imposed must recognise the importance of deterring others from not taking due care in understanding and complying with workplace obligations, particularly where vulnerable workers such as apprentices are involved. In those circumstances, I accept the claimant’s submission that a penalty at the higher end in this case, is justified.
Respondent’s financial position
105 Although the financial capacity of a respondent to pay a fine is a matter the Court may have regard to when determining a penalty, I do not intend to pay much regard to it as a factor in this case.
106 As the Federal Court held in Commissioner of Taxation v Arnold (No 2) [2015] FCA 34; 324 ALR 59 at [200]  [203], the financial position of the person against whom an order is made may be relevant, but in most cases, it will not carry great weight in the assessment of a penalty. See also Callan v Smith at [109].

107 If financial capacity is to be relied upon by way of mitigation when determining penalty, it must be properly evidenced: Fair Work Ombudsman v Darrell Crouch and Associates Pty Ltd [2023] FedCFamC2G 80 at [73]  [74] citing Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392; 177 IR 337.
108 The bank statements the respondent submitted do not provide a sound basis to properly assess the respondent’s financial means to pay a penalty. In any event, the respondent has had almost two years since he was first issued the compliance notice to get his financial affairs in order.
109 There is no evidence that relieving the respondent of the consequence of a fine is somehow going to prompt him to rectify the underpayment. On the contrary, it appears the warnings I gave the respondent at the first and second initial hearings regarding the potential for pecuniary penalties, unfortunately, had little effect.
Penalty to be imposed
110 For the reasons outlined in the preceding paragraphs, I have concluded the respondent’s failure to comply with a compliance notice cannot be allowed to occur without consequence.
111 I have therefore determined that a penalty fixed in the sum of $5,000 is an appropriate disposition in this case.
Other orders
112 Pursuant to s 83F(2) of the IR Act I will also order that payment of the penalty be made to the claimant.
113 The claimant sought an order under s 83E(11) of the IR Act for the payment of its disbursements, fixed in the sum of $99. The amount claimed was for the cost of engaging a process server to personally serve the respondent with the originating claim.
114 The amount the claimant sought in disbursements was reasonable in the circumstances. I will accordingly make an order requiring the respondent pay this sum too.
115 Finally, and as the compliance notice was issued to rectify the underpayment, I will make an order under s 83E(2) of the IR Act requiring the respondent pay Mr Cohen the sum of $11,617.41.
116 Having found the contravention of s 84T of the IR Act proved and noting the respondent has admitted to both the underpayment and his failure to comply with the compliance notice, it is appropriate this order be made to prevent any further breach of the compliance notice.



T. KUCERA
INDUSTRIAL MAGISTRATE