2024 WAIRC 00747
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2024 WAIRC 00747



CORAM
:
INDUSTRIAL MAGISTRATE D. SCADDAN



HEARD
:
WEDNESDAY, 24 JULY 2024



DELIVERED
:
WEDNESDAY, 24 JULY 2024



FILE NO.
:
M 54 OF 2024



BETWEEN
:
YICHEN YU


CLAIMANT





AND





THE BLASTA GROUP PTY. LTD.


RESPONDENT

CatchWords : INDUSTRIAL LAW – FAIR WORK – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth) – Underpayment of award rate under modern award
Legislation : Fair Work Act 2009 (Cth)
Industrial Relations Act 1979 (WA)
Crimes Act 1914 (Cth)
Industrial Magistrate’s Court (General Jurisdiction) Regulations 2005 (WA)
Instrument : Road Transport and Distribution Award [MA000038]
Case(s) referred
to in reasons: : Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450
Miller v Minister of Pensions [1947] 2 All ER 372, 374
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560
Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336
Result : Pecuniary penalty to be paid
Representation:
Claimant : In person
Respondent : No appearance



REASONS FOR DECISION
(Given extemporaneously at the hearing, extracted from the transcript of proceedings and edited by her Honour)
Introduction
1 On 23 April 2024, the claimant, Yichen Yu, filed a claim alleging the respondent failed to comply with the Road Transport and Distribution Award [MA000038] (the Award) and contravened the Fair Work Act 2009 (Cth) (FWA) by failing to pay him the correct rate of pay under the Award.
2 The claimant:
a. claimed $5,269.25 for unpaid entitlements comprising $3,928.77 for unpaid wages and $1,340.48 for associated unpaid superannuation (the Underpayment);
b. applied for prejudgment interest on any judgment amount; and
c. applied for a penalty with any amount determined to be paid to him.
(the Claim)
3 On 30 May 2024, the claimant applied for default judgment when the respondent failed to lodge a response to the Claim (the Application).
4 On 19 June 2024, the Industrial Magistrates Court (IMC), being satisfied the Claim and the Application had been served upon the respondent, heard the Application and, pursuant to regulation 8(2) of the Industrial Magistrate’s Court (General Jurisdiction) Regulations 2005 (WA) (the Regulations) when read with s 545(3) of the FWA, ordered judgment for the claimant against the respondent in the amount of $5,269.25 in default of the respondent lodging a response to the Claim (i.e. for the Underpayment).
5 In making the order for judgment, the IMC was satisfied, on an unchallenged basis upon which the Claim was made, that the claimant was a national system employee; the respondent was a national system employer; and the Award covered and applied to both parties. Further, the IMC was satisfied that the respondent contravened the Award by failing to pay the claimant the correct rate of pay, as alleged.
6 The IMC also ordered the respondent to pay interest on the prejudgment amount of $110.
7 As the claimant also applied for a pecuniary penalty in respect of the contravention, the parties were provided an opportunity to put evidence before the Court on the payment of a pecuniary penalty, and the hearing of the penalty was adjourned to 24 July 2024 (the Penalty Hearing). The claimant did so. The respondent did not.
8 The claimant attended the Penalty Hearing. The respondent did not.
9 Schedule I of these reasons outlines the jurisdiction, standard of proof and practice and procedure of the IMC.
10 Schedule II of these reasons outlines the provisions of the FWA and principles relevant in determining an appropriate pecuniary penalty (if any) for the respondent’s contravention.
Claimant’s Evidence
11 The claimant stated in his evidence that he was aware the respondent employed between 50 and 100 employees. The claimant was employed on a casual basis and worked three to five days a week driving a van, delivering boxes of beer and kegs to bottle shops and bars.
12 The claimant said his working hours were reported to Steven Russell (Mr Russell), a director of the respondent (as evidenced in text messages between him and Mr Russell). The claimant said he did not receive his wages on time, and regularly had to remind Mr Russell to pay his wages. In addition, the payments he received were often incorrect and less than what he was entitled to. The claimant referred to text messages between him and Mr Russell where he requested payment of his wages.
13 The claimant said the delay in receiving his wages and the Underpayment caused him stress and meant that he could not pay his rent on time and had to forego basic necessities. In addition, the claimant was required to seek legal advice and commence legal proceedings to recover the Underpayment, which was made more difficult as English is his second language.
Determination On Penalty
14 The IMC is empowered to order a person to pay a pecuniary penalty the court considers appropriate if the court is satisfied that the person has contravened a civil remedy provision: s 546(1) of the FWA.
15 A contravention of s 45 of the FWA is a contravention of a civil remedy provision: s 539(2) of the FWA. In making the order for default judgment, the IMC was satisfied of the basis for the Claim and the Underpayment, and that the respondent contravened s 45 of the FWA in failing to pay the claimant the correct rate of pay under the Award.
16 The maximum penalty with respect to a contravention of s 45 of the FWA by the respondent is 300 penalty units, given the respondent is a body corporate. The maximum penalty in respect of the contravention is $93,900.
17 Having regard to the claimant’s evidence, the Underpayment was not an insignificant amount, and irrespective of whether the contravention was deliberate or not, the effect of the Underpayment is the claimant was denied his lawful entitlement.
18 On the claimant’s evidence, the respondent is medium sized company, who should be expected to have sufficient structures in place to ensure compliance with the FWA and the Award to which it is bound.
19 The communication between the claimant and the respondent’s director demonstrates the respondent’s knowledge of the claimant’s work hours, the delay in making payment for the time worked and the claimant’s concern about correct pay rate. This arguably demonstrates, at worst, wilful disregard or, at best, carelessness, by the respondent to the claimant’s concerns.
20 There is no evidence of corrective action, and the claimant was required to commence legal proceedings to recover the Underpayment. In addition, the claimant was vulnerable as English is his second language.
21 Therefore, the following considerations are significant in assessing the appropriate penalty in this case:
whether the organisation has engaged in similar conduct: the respondent has not been found to have previously contravened the FWA;
whether the conduct was deliberate: the communications between the claimant and Mr Russell appear to demonstrate an ongoing noncompliance with employment law during the claimant’s short employment with the respondent. As stated, at worst this demonstrates willful disregard, or at best carelessness, to its obligations. The respondent is obliged to comply with the terms of the Award as it relates to rates of pay;
corrective action: there is no information before the Court as to whether the respondent has taken corrective action, although the claimant was required to commence legal proceedings to recover the Underpayment;
contrition and avoidance of repetition: there is limited information before the Court as it relates to contrition, although the communication between the claimant and Mr Russell is not suggestive of contrition. The claimant was required to commence legal proceedings to recover the Underpayment;
the size of the entity and involvement of senior management: the respondent is a medium business in Australia employing approximately 50 to 100 people. Regardless of its size, the respondent has an obligation under the law and to its employees to act in a diligent manner with respect to employee entitlements; and
loss or damage suffered as a result: the claimant’s consequential ‘loss’ (being the actual entitlements) is reasonably modest but the failure to pay affected the claimant. Importantly, the claimant was a vulnerable employee as English is his second language.
22 The contravening conduct in all circumstances is properly categorised in the medium range.
23 There is a need for specific deterrence and the need to deter employers more generally in contraventions of the FWA to ensure the public interest in the protection of employee entitlements, particularly as it relates to vulnerable employees.
24 While criminal penalties import notions of retribution and rehabilitation, the primary purpose of a civil penalty is to promote the public interest in compliance with the law and not as an additional award of compensation for financial or emotional stress, hurt feelings, inconvenience or legal fees. Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 [55] (referring to Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076).
This purpose is met by imposing an ‘appropriate penalty’ striking a balance between oppressive severity and the need for deterrence in respect of the particular case. Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson) [46].

25 Further, in certain cases a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against future contraventions where, by way of example, the contravention is a ‘oneoff’ result of inadvertence and not part of a deliberate strategy to circumvent the law; the person responsible for the contravention has been disciplined or counselled; there is genuine remorse; or the contravention is unlikely to arise again having regard to the reduced risk of future contraventions. Pattinson [46] and [47].
This is not a case of that type.
26 For the above reasons, the penalty to be applied in respect of the claimant’s claim is:

Maximum
Penalty applied
Breach of Award contravention
$93,900

Total

$9,000
27 In my view, no reduction for totality is required, and $9,000 is an appropriate penalty ‘that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case.’ Pattinson [46].
This would also be consistent with the principle that the penalty must not be excessive and must be just and appropriate in all the circumstances of the case.
28 The claimant seeks an order pursuant to s 546(3)(c) of the FWA that the penalty be paid to him. An order will be made that the respondent pay the penalty of $9,000 to the claimant.
Orders
29 Pursuant to s 546(1) of the FWA, the respondent is to pay to the claimant a pecuniary penalty of $9,000.


D. SCADDAN
INDUSTRIAL MAGISTRATE




Schedule I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court of Western Australia Under the Fair Work Act 2009 (Cth)
Jurisdiction
[1] An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the FWA. The IMC (or Court), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12 of the FWA (see definitions of ‘eligible State or Territory court’ and ‘magistrates court’); Industrial Relations Act 1979 (WA) s 81, s 81B.
[2] The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: s 544 of the FWA.
[3] The civil penalty provisions identified in s 539 of the FWA include:
· Section 45 – contravention of an award;
[4] An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the [Australian] Constitution applies’: s 14, s 12 of the FWA. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed … by a national system employer…’: s 13 of the FWA.
[5] Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for a person to pay a pecuniary penalty: s 546 of the FWA.
Burden and Standard of Proof
[6] In an application under the FWA, the claimant carries the burden of proving the claim. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:
It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: “We think it more probable than not,” the burden is discharged, but, if the probabilities are equal, it is not.
[7] In the context of an allegation of the breach of a civil penalty provision of the Act it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336:
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences. (362)
[8] Where in this decision it is stated that a finding has been made, the finding is made on the balance of probabilities. Where it is stated that a finding has not been made or cannot be made, then no finding can be made on the balance of probabilities.
Practice and Procedure of the Industrial Magistrates Court of Western Australia
[9] Subject to the provisions of the FWA, the procedure of the IMC relevant to claims under the FWA is contained in the Regulations. Notably, regulation 35(4) provides that ‘the court is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit.’
[10] In Sammut v AVM Holdings Pty Ltd [No 2] [2012] WASC 27, Commissioner Sleight examined a similarly worded provision regulating the conduct of proceedings in the State Administrative Tribunal and made the following observation:
The tribunal is not bound by the rules of evidence and may inform itself in such a manner as it thinks appropriate. This does not mean that the rules of evidence are to be ignored. The more flexible procedure provided for does not justify decisions made without a basis in evidence having probative force. The drawing of an inference without evidence is an error of law. Similarly such error is shown when the tribunal bases its conclusion on its own view of a matter which requires evidence. [40] (citations omitted)


Schedule II: Principles Relevant in Determining an Appropriate Pecuniary Penalty
[1] The FWA provides that the IMC may order a person to pay an appropriate pecuniary penalty if the court is satisfied that the person has contravened a civil remedy provision: s 546(1) of FWA. The maximum penalty for each contravention by a natural person, expressed as a number of penalty units, set out in a table found in s 539(2) of the FWA: s 546(2) of the FWA. If the contravener is a body corporate, the maximum penalty is five times the maximum number of penalty units proscribed for a natural person: s 546(2) of the FWA.
[2] The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): s 12 of the FWA. The relevant rate is that applicable at the date of the contravening conduct:
October 2023 to February 2024
$313
[3] The purpose served by penalties was described by Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 [388] in the following terms:
In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose. (citations omitted)
[4] In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 [42], the plurality confirmed that civil penalties ‘are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions’. However, ‘insistence upon the deterrent quality of a penalty should be balanced by insistence that it “not be so high as to be oppressive”’: [40], citing NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285.
[5] In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 [14], Tracey J adopted the following ‘nonexhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ which had been set out by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
[6] The list is not ‘a rigid catalogue of matters for attention. At the end of the day 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.’ (Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 (Australian Ophthalmic Supplies) [91]).
[7] Although these factors provide useful guidance, the task of assessing the appropriate penalty is not an exact science: Commonwealth v Director, Fair Work Building Inspectorate [2015] HCA 46; 258 CLR 482 [47]. The Court must ultimately fix a penalty that pays appropriate regard to the contraventions that have occurred: Pattinson [19]. ‘[A] court empowered by s 546 to impose an “appropriate” penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act:’ Pattinson [48].
[8] The totality of the penalty must be re-assessed in light of the totality of the offending behaviour. If the resulting penalty is disproportionately harsh, it may be necessary to reduce the penalty for individual contraventions. Australian Ophthalmic Supplies [47] - [52].
[9] Section 546(3) of the FWA also provides:
Payment of penalty
(3) The court may order that the pecuniary penalty or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
[10] In Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244 [40] - [44], Mortimer J, in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; 239 FCR 336, summarised the law:
[T]he power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. … [T]he initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons … in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the Gibbs [Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216] … exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted. (original emphasis) (citations omitted)