WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2019 WAIRC 00656

DELIVERED : Thursday, 22 August 2019

FILE NO. : M 198 OF 2017

CLAIMANT

AND

Seatours Pty Ltd, trading as Pizza Bella Roma Fremantle

FIRST Respondent

Chris Johnson

SECOND Respondent

CatchWords : INDUSTRIAL LAW – FAIR WORK – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth) – Application for costs

Legislation : Fair Work Act 2009 (Cth)

Long Service Leave Act 1958 (WA)

Industrial Relations Act 1979 (WA)

Magistrates Court (Civil Proceedings) Act 2004 (WA)

Crimes Act 1914 (Cth)

Workplace Relations Act 1996 (Cth)

Taxation Administration Act (Cth)

Instrument : Restaurant Industry Award 2010 [MA000119]

Case(s) referred to

in reasons : Singh v Seatours Pty Ltd t/as Pizza Bella Roma Fremantle and

Anor [2019] WAIRC 359

Sayed-v- Construction, Forestry, Mining and Energy Union [2016] FCAFC 4

Fair Work Ombudsman v Mamak Pty Ltd & Ors [2016] FCCA 2104

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

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8

Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62

Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832

Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244

Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46

Trade Practices Commission v CSR Ltd [1990] FCA 521

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Ryan v Primesafe [2015] FCA 8

Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509

Rentuza v Westside Auto Wholesale [2009] FMCA 1022

McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086

Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394

Result : Pecuniary penalty to be paid, costs order made

Representation:

Claimant : Mr G. McCorry (agent) from Labourline

Respondents : Ms L. Langridge (of counsel) from Sparke Helmore Lawyers

SUPPLEMENTARY REASONS FOR DECISION

1          On 4 July 2019, Seatours Pty Ltd, trading as Pizza Bella Roma Fremantle (the First Respondent) was found to have contravened the Fair Work Act 2009 (Cth) (the FWA) in that the First Respondent was found to have failed to pay Satnam Singh (the Claimant) the relevant hourly rates applicable to his classification under the Restaurant Industry Award 2010 [MA000119] (the Award) from time to time and in doing so, contravened a civil remedy provision in failing to pay the amount, associated penalties and superannuation.

2          The First Respondent was also found to have contravened the FWA in failing to keep prescribed records, failing to record start and finish times and failing to provide accessible copies of the National Employment Standards (NES) and the Award.

3          Further, the First Respondent admitted that it had not paid an amount owed under the Long Service Leave Act 1958 (WA).

4          The parties were invited to make submissions on quantum having regard to the findings made by the Industrial Magistrates Court (IMC).

5          In Singh v Seatours Pty Ltd t/as Pizza Bella Roma Fremantle and Anor [2019] WAIRC 359 the IMC provided its reasons for decision in respect of the contraventions.

6          These supplementary reasons are in relation to an application by the Claimant for a pecuniary penalty pursuant to s 546(1) of the FWA and to determine (if necessary) the quantum of the claim.

7          The parties each provided an outline of written submissions on the payment of a pecuniary penalty and quantum. Further, the First Respondent and Chris Johnson (Mr Johnson) (the Respondents) have made an application for costs pursuant to s 570(1) of the FWA.

8          Schedule I of these supplementary reasons outline the jurisdiction, standard of proof and practice and procedure of the IMC in determining this case.

9          Schedule II of these supplementary reasons outline the provisions of the FWA and principles relevant in determining an appropriate pecuniary penalty (if any) for the First Respondent's contraventions.

Quantum

10       The parties conferred and, having regard to the findings made in the substantive decision, agree on the following amounts to be paid by the First Respondent to the Claimant:

11       Therefore, the total agreed amount to be paid by the First Respondent is $15,885.15.

The Claimant’s Submissions On Penalty

12       In summary, the Claimant submits:

• the First Respondent’s conduct can be characterised as:
  • seriously negligent or in reckless disregard of its obligations in respect of the monetary contraventions occurring prior to March 2014;
  • it knew the Award applied where it paid in accordance with the Award for hours worked from Monday to Friday, but not for weekend or public holiday work;
  • deliberately in breach of the Award and record keeping obligations from March 2014 to June 2015 when the Claimant was paid a flat rate of pay for all hours worked;
  • seriously negligent or in reckless disregard of its obligations in respect of the monetary contraventions occurring after May 2015; and
  • a contumelious disregard of its obligation to pay the outstanding annual leave, annual leave loading, personal leave and long service leave on cessation of Claimant’s employment,
• the First Respondent knew the Award applied and ignored the obligations of penalty rates applying on weekends and public holidays;
• there is no reasonable excuse for failing to pay the Claimant the correct award rates of pay for the work he was doing from January 2015 onwards, once the First Respondent had decided to go back to paying in accordance with the Award in June 2015;
• there was no effort made to correct any underpayments that occurred between the end of May 2015 and reclassification of the Claimant several weeks later;
• the First Respondent knew these amounts were owing and has, and continues to make, no effort to pay them with no reasonable basis for not doing so;
• the First Respondent was seriously negligent in respect of its record keeping obligations and the records kept by the First Respondent do not enable the court or any regulator to determine the extent of compliance with the Award;
• relevant to the period July 2012 to 16 February 2014, the Claimant accepts that each weekly contravention of each Award obligation constitutes a course of conduct by the First Respondent and accordingly there are three contraventions of s 45 of the FWA;
• relevant to the period 16 February 2014 to 29 May 2015, there are nine distinct contraventions of s 45 of the FWA and two contraventions of s 44 of the FWA; and
• in total there are five non-monetary contraventions, two of which contravene s 45 of the FWA and three of which contravene s 535 of the FWA.

13       It is not enough to adopt the cavalier approach to compliance with the Award where the Fair Work Ombudsman’s (FWO) research reveals:

• the restaurant industry accounted for 11% of all disputes lodged with FWO between July 2013 to June 2016 (the highest of all industries from which dispute forms were received);
• the FWO conducted 1,066 compliance activities during the 2015 ‘National Hospitality Industry Campaign – Restaurants, Cafes and Catering’ and found 58% businesses to be in contravention; and
• the restaurant industry represented a significant proportion of compliance outcomes in the 2015 - 2016 financial year.

14       Therefore, the need for general deterrence is great.

15       A substantial personal deterrent penalty is also called for as the First Respondent expressed no contrition and failed to make payment of monies due at the cessation of the Claimant’s employment without a reasonable excuse.

16       The First Respondent principal’s attitude toward the contraventions during the hearing was cavalier and amounts to egregious conduct.

17       The Claimant submits that a totality principle discount of 40% is appropriate to be applied and the appropriate total of penalties to be imposed should be between $28,000 and $56,000.

18       The penalties should be awarded to the Claimant in accordance with decision in Sayed-v- Construction, Forestry, Mining and Energy Union [2016] FCAFC 4.

19       The First Respondent should be ordered to pay to the Claimant and the Claimant’s superannuation fund the amounts specified.

The First Respondent’s Submissions On Penalty

20       In summary, the First Respondent submits:

• this is not a matter in which an imposition of penalties is necessary to encourage general or specific deterrence;
• if the court is minded to impose a penalty, the appropriate amount is $10,125 to $15,225, considering the First Respondent’s conduct and the totality principle;
• any penalty should be paid to the Commonwealth consolidated revenue;
• it is entitled to the benefit of the statutory aggregation provision in s 557(1) of the FWA as the contraventions were all committed by the First Respondent and arose out of a ‘course of conduct’, reducing the number of contraventions to a maximum of seven;
• beyond s 557(1) of the FWA, the court has an additional sentencing discretion to further group contraventions that have some common elements;
• the First Respondent agrees with the submissions made by the Claimant that it is appropriate to group several of the contraventions together so as to reflect a single course of conduct and, accordingly, it would be open for the court to group the:
  • ‘penalty rate’ contraventions between 2012 and March 2014 and June 2015 and August 2015, all of which involve a contravention of cl 34 of the Award;
  • ‘penalty rate’ contraventions between March 2014 and June 2015, all of which involve a contravention of cl 34 of the Award;
  • ‘annual leave’ contraventions for payment of annual leave and annual leave loading both of which involve a contravention of cl 35.2 of the Award;
  • ‘access’ contraventions relating to access to the NES and Award, both of which involve a contravention of cl 5 of the Award; and
  • ‘record keeping’ contraventions relating to the making and keeping of employee records, which relate to contraventions of s 535 of the FWA,
• it acknowledges that regard must be had for the separate legal quality of the obligations it has failed to observe, but says that the integrity and character of these obligations would be maintained if the court grouped the proposed 14 contraventions as:
  • minimum wage contravention;
  • penalty contraventions between 2012 – March 2014 and June 2015 – August 2015;
  • penalty contraventions between March 2014 – June 2015;
  • superannuation contravention;
  • annual leave contraventions;
  • personal leave contraventions;
  • access contraventions; and
  • records contraventions,
• if the court adopted these groupings, the total number of contraventions of s 45 of the FWA would be six (reduced from thirteen) and total number of contraventions of s 535(1) of the FWA would be reduced to one (from three); and
• in total there would be seven contraventions in respect of which the court could consider applying a penalty.

21       The Claimant’s characterisation of the First Respondent’s conduct as ‘deliberate’ and ‘seriously negligent’ is not borne out by the evidence where the Claimant has failed to adequately make allowance for the various attempts by the First Respondent to resolve the claim prior to hearing.

22       There is no evidence before the court as to the effect of the contraventions on the Claimant.

23       There is no dispute that throughout the course of employment the Claimant received payslips and was provided with incremental pay increases over the years demonstrating the First Respondent’s intentions to comply with its obligations under the FWA, rather than a wilful attempt to deceive the Claimant and deprive him of any benefit.

24       At various times the First Respondent paid the Claimant in excess of the minimum entitlements under the Award.

25       The Claimant’s submissions for wanting to impart a ‘substantial personal deterrent penalty’ on the basis that the First Respondent ‘expressed no contrition’ and that the First Respondent principal’s attitude was ‘cavalier and amounts to egregious conduct’ are not supported by the findings of the court which stated: Mr Johnson accepted certain errors had been made, and the First Respondent offered to remedy the discrepancies once they had been identified, and settle the Claimant’s claim above the amount claimed by him.

26       It is unfair to describe the First Respondent’s conduct as ‘cavalier’ in circumstances where it employed a bookkeeper and restaurant manager to assist in obligation compliance.

27       The First Respondent has not previously been found by a court to have contravened any workplace laws to which it is bound.

28       The First Respondent is a small to medium sized private business and does not have dedicated human resources personnel, but a bookkeeper and restaurant manager are engaged to assist with its payroll administration and Award complication. It is not a business of ‘vast resources’.

29       The First Respondent submits detriment occurred prior to the finding of any contravention by way of the Claimant’s public statements regarding the proceedings published in the Fremantle Herald newspaper, namely in April 2018, the Claimant participated in an interview for an article where he alleged, he had been underpaid approximately $70,000 and states he was sacked and not allowed appropriate sick leave. Further, on or around 29 April 2019, the Claimant participated in a further article in the Fremantle Herald which details the Claimant as ‘alleging underpaid wages and discrimination in the workplace’.

30       It is submitted that consideration should be given to the impact the Claimant’s public statements have had on the First Respondent’s reputation locally, particularly as there were no findings that the First Respondent’s actions were deliberate or racially motivated.

31       The First Respondent has learnt from the experience of these proceedings and has taken additional steps to ensure mistakes previously made are not repeated, including reviewing its systems and payslips to ensure future compliance, engaging lawyers to provide a fact sheet setting out its obligations under the Award, moved copies of the NES and the Award to a noticeboard visible and easily accessible to its current employees, has been open throughout the proceedings about its mistakes and has made a number of attempts to resolve the claim with the Claimant.

32       Therefore, the First Respondent rejects the Claimant’s classification of it expressing ‘no contrition’ and states it has not exhibited a ‘cavalier’ attitude or engaged in ‘egregious conduct’ where multiple offers to resolve the claim demonstrate the First Respondent has taken the claims seriously and taken steps to try resolve, including upping its offers without any movement from the Claimant.

33       There is nothing in the circumstances of this case that identify it as an appropriate vehicle to send a message to the restaurant industry and cautions using FWO research or statistics where ‘statistics such as these are meaningless without other information’: Fair Work Ombudsman v Mamak Pty Ltd & Ors [2016] FCCA 2104 (per Judge Smith).

34       The various contraventions were the result of inadvertence on the First Respondent’s part and the Claimant’s attempt to characterise the contraventions as deliberate is not supported by the evidence.

35       The relatively small quantum of the underpayment and the bulk of the underpayment is attributable to long service leave, which would have been paid if there had been any finality to the Claimant’s employment or if he had accepted one of the many settlement offers put to him.

36       This is not a case in which penalties should be ordered to the Claimant where the First Respondent offered to pay in excess of the total sum claimed by the Claimant prior to the hearing and it submits the Claimant withheld on the basis he considered he was likely to obtain substantial penalties and therefore financial benefit.

37       The payment of penalties personally should not encourage the maintenance of a claim once all reasonable attempts to resolve it have been made, including offers in amounts in excess of the quantum of the claim.

Determination On Penalty

38       The maximum penalty with respect to each contravention of s 44 and s 45 of the FWA by the First Respondent is 60 penalty units which equates to between $51,000 and $63,000, given the First Respondent is a body corporate.1

39       The maximum penalty with respect to each contravention of s 535 of the FWA by the First Respondent is 30 penalty units which equates to $31,500 given the First Respondent is a body corporate.2

40       The effect of s 557(1) of the FWA is that two or more contraventions of the FWA are taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person.

41       I have had regard to the parties’ submissions and to the findings in the substantive decision and I find that certain contraventions by the First Respondent are properly characterised as a single contravention where there is commonality in the conduct or the contravention flows from a course of conduct. I adopt the First Respondent’s grouping of the contraventions as follows:

• minimum wage contravention (June to August 2015);
• penalty contraventions (July 2012 to March 2014 and June 2015 to August 2015);
• penalty contraventions (March 2014 to June 2015);
• superannuation contravention;
• annual leave contraventions (including annual leave loading);
• personal leave contraventions;
• access contraventions (the Award and NES); and
• records contraventions.

42       The following considerations are significant in assessing penalties in this case:

• the determination of the claim required consideration of the Award and its applicability to work carried out by the Claimant;
• the First Respondent failed in that context to pay the Claimant the correct award rates relevant to ordinary pay, penalty rates, annual leave, annual leave loading and personal leave (the superannuation follows as a result). While any underpayment has serious consequences for a claimant and must be treated accordingly by the court, in this case the contraventions were not of the flagrant disregard often seen in the restaurant industry;
• the First Respondent has not been found to have previously contravened the FWA;
• while there was a course of conduct because of the failure of the First Respondent to pay relevant award rates, the First Respondent accounted to the Claimant for wages paid and entitlements owed and increased pay rates over the time period. Therefore, in that sense, the First Respondent did not attempt to ‘hide’ any contraventions;
• Mr Johnson, on behalf of the First Respondent, admitted the First Respondent’s shortcomings and, I accept, the First Respondent made efforts to resolve the claim before the hearing;
• the First Respondent has taken significant steps to ensure future compliance and employed others to carry out administrative duties to comply with the Award and the FWA;
• together this demonstrates, if not contrition, a willingness to learn from the proceedings and a commitment not to repeat the conduct;
• the First Respondent is a small to medium sized private business;
• a degree of proportionality is required when regard is had to each contravention (for example, the total personal leave entitlement owed is $44.53);
• the Claimant’s behavior was, at times, unsatisfactory both in relation to imprudent comments made to the media and the allegations made but not substantiated; and
• there is a high need for general deterrence to ensure compliance and vigilance in an industry where employees are often disadvantaged or prejudiced because they are unskilled, English is their second language and/or they are often migrants lacking knowledge of their entitlements (I accept that this does not wholly apply in the Claimant’s case).

43       In light of the above, considerations of punishment and specific deterrence are less important in this case than the need to deter employers more generally in contraventions of the FWA. The conduct in all the circumstances is properly categorised in the low range.

44       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.3

45       For these reasons, and taking into account the principles of totality, the penalties to be applied are:

46       The Claimant seeks an order pursuant to s 546(3)(c) of the FWA that the penalties be paid to him and, while the Claimant’s conduct is a factor for consideration, an order is made that the First Respondent pay the penalty of $27,000 to the Claimant.

Respondents’ Application For Costs

47       Pursuant to s 570(1) of the FWA a party to proceedings in relation to a matter arising under the FWA may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2), s 569 or s 569A.

48       Relevant to the application, subsection (2)(b) provides that a party may be ordered to pay costs only if the court is satisfied that the party’s unreasonable act or omission cause the other party to incur costs.

49       The Respondents have applied for costs and rely upon the affidavit of Layla Louise Langridge affirmed 5 August 2019 in support of the application.

50       As I understand the Respondents’ submission on costs, it says:

• the Claimant’s rejection of its offer on 26 March 2019 constitutes an unreasonable act which warrants an order of indemnity costs from that date;
• there are several authorities which confirm a failure to accept a reasonable offer of settlement may constitute an unreasonable act or omission;
• an offer made in excess of the entire quantum of the claim is a reasonable offer;
• it was an unreasonable act to purse the claim after the date upon which the Respondents had offered to pay the quantum sought;
• the Claimant’s expectations regarding potential settlement and/or penalty outcomes of the claim were unattainable and unrealistic;
• two Magistrates warned the Claimant of the potential for an adverse costs order and he still proceeded with his claim with seemingly very little regard or due consideration that the matter may not be determined wholly in his favour; and
• the Claimant also had the benefit of professional advice, guidance and representation and it is not a matter in which he should have been ignorant.

51       Further, the Respondents submit the Claimant failed to conduct his case in a reasonable manner throughout proceedings including:

• making the Respondents respond to four different iterations of his claim;
• pursuing a default judgement application which had no reasonable prospects of success;
• continuing to pursue the claim after 8 March 2019;
• continuing to pursue the claim after 26 March 2019 when the offer was more than that of his claim;
• continuing to pursue the claim after 27 March 2019 after the risks of an adverse costs order were raised by Industrial Magistrate Flynn;
• continuing to pursue the claim after 3 April 2019 after the risks of an adverse costs order were reiterated by Industrial Magistrate Scaddan;
• failing to institute reasonable counter offers or negotiations in response to the offers of settlement extended to him demonstrating an unwillingness to compromise and genuinely consider the Respondents’ attempts to settle; and
• the Claimant was determined to pursue the matter to hearing notwithstanding the issues with his claim.

52       The Respondents say they have incurred total costs since 26 March 2019 of $37,946.

53       As I understand the Claimant’s submission in response to the application for costs, he says:

• the rejection of the Respondents’ offer was not unreasonable in the circumstances;
• the Respondents’ purported ‘Calderbank’ offer of $45,000 was to be taxed as an employment termination payment if the Claimant discontinued the claims against the Respondents;
• the ‘Calderbank’ offer was imprecise, not marked ‘without prejudice save as to costs’, failed to provide a reasonable time period in which to be considered, did not state the costs advantage, did not make provision for costs separate from the principal offer and it was not clear (amongst other things);
• the Claimant’s first language is not English, and he was not given a reasonable time to consider the offer with the assistance of an interpreter;
• there were no defects identified in the Claimant’s evidence;
• the Respondents’ offer was ambiguous where the Respondents’ sought indemnity costs on one hand and solicitor/client costs on another;
• an offered sum subject to taxation as an ‘employment termination payment’ would preclude the Claimant from claiming a tax deduction in respect of the Claimant’s legal expenses;
• the Respondents’ representative has not been forthcoming on all matters relevant to settlement discussions and has improperly disclosed the content of without prejudice settlement discussions;
• in light of the Respondents’ late disclosure of information, it was not unreasonable for the Claimant to conclude the claim would proceed to trial;
• civil penalty proceedings are a prosecution and the Claimant is entitled to claim for a penalty to be imposed; and
• the costs amount is imprecise.

Determination On Costs Application

54       In Ryan v Primesafe [2015] FCA 8, Mortimer J states (omitting citations) at [64] - [65]:

The discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectra 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’.

55       In Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509, Gilmour J states (omitting citations):

[8] The purpose of s 570 is to ensure that litigants, including respondents, are not deterred from ‘complete[ly] and robust[ly]’ defending claims for contravention.

[9] In light of this purpose, costs will rarely be awarded under [s 570] and exceptional circumstances are required to justify the making of such an order. Courts should be particularly cautious before finding that a party has engaged in an unreasonable act or omission, lest that discourages parties from pursuing litigation in the manner which they deem best.

[10] That a party has a ‘self-evidently weak case’ is not enough to warrant a costs order. There must be ‘a higher level of criticism or disapprobation’ Indeed, costs were not awarded against the FWO even though elements of the FWO's case were ‘artificial and unsatisfactory’ and ‘potentially bizarre’.

[11] Where a party relies on s 570(2)(b), the Court must be satisfied of two matters: there must be an unreasonable act or omission; and that act or omission must have ‘caused’ costs to be incurred.

[12] The pursuit of a case by a party in circumstances where, on the materials before the party at the time, there was no substantial prospect of success may constitute an unreasonable act or omission. However, that an argument is ultimately not accepted does not mean it is unreasonable to put it.

[13] Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs.

56       In Rentuza v Westside Auto Wholesale [2009] FMCA 1022, Lucev FM states (omitting citations):

[27] Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.

[28] The exercise of the discretion in s 570(2)(b) is not necessarily engaged because:

(a) a party does not conduct litigation efficiently;

(b) a concession is made late;

(c) a party may have acted in a different or timelier fashion;

(d) a party has adopted a genuine but misguided approach.

57       In McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 20864 (referred to in Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394 [29]), Buchanan J considered that costs could be awarded against a party for refusing a reasonable offer for settlement, on the basis it constitute ‘an unreasonable act or omission, [which] caused another party to the proceeding to incur costs in connection with the proceeding’.

58       Further, in Australian Licensed Aircraft Engineers Association [31], Barker J stated:

It is open to the Court to have regard to the without prejudice exchanges that culminated in the respondent rejecting a final offer of settlement made on behalf of the applicant on 6 January 2011 just before trial in order to determine whether the unreasonable act or omission of the respondent caused the applicant to incur costs.

59       Ms Langridge deposes to the Respondents making the following offers of settlement:

• on 4 April 2018, the Respondents offered to settle the claim for $13,377.30 comprising $6,117.56 for potential underpayment and $7,259.74 for long service leave owed. The Claimant offered to settle for $75,000. The Claimant was represented at this time;
• on 8 March 2019, the Respondents offered to settle the claim for $20,000 if the Claimant agreed to discontinue the claim. The offer was open until 22 March 2019 and the Respondents advised that no further offers would be made, however, the Claimant was put on notice of a cost’s application on a solicitor/client basis, if the Claimant’s claim was determined for less than $20,000. The Claimant was represented at this time;
• on 26 March 2019, the parties attended a pre-trial conference. The Respondents’ representative read a pre-prepared statement and identified several issues that were also referred to by the IMC in the reasons for decision and identified to the Claimant at the conference. In addition, the Respondents made a further offer of settlement of $32,399.12 comprising $17,039.27 for purported unpaid wages between July 2012 and February 2017, $7,259.74 for long service leave entitlements, $5,474.67 for unpaid annual leave entitlements, $1,006.78 for unpaid annual leave loading entitlements and $1,618.73 for unpaid superannuation contributions. The Claimant provided to the Respondents his own assessment of the penalties to be applied to the claim.
• on 26 March 2019,5 the Respondents’ representative wrote to the Claimant’s representative seeking to resolve the claim with an offer of settlement of $45,000 to be taxed as an employment termination payment if the Claimant discontinued the claim. The correspondence also noted that this amount exceeded the quantum of the Claimant’s claim, which at the time was approximately $39,000. The Claimant was again forewarned of a potential costs application and advised the letter would be produced to the court if necessary. The offer was open to 2 April 2019;
• on 27 March 2019, at a second direction’s hearing before Industrial Magistrate Flynn, the Respondents reiterated the offer of $45,000 to be taxed as an employment termination payment. The offer was an open offer. The Claimant was represented;
• on 29 March 2019, the Respondents’ representative again wrote to the Claimant’s representative seeking to resolve the claim with an offer of settlement of $45,000 to be taxed as an employment termination payment if the Claimant discontinued the claim. In this letter the Respondents’ representative informed the Claimant’s representative that it intended to pursue indemnity costs if the claim was determined less than that offered; and
• on 3 April 2019, at the commencement of the hearing, the Respondents again reiterated its offer of settlement and the court adjourned to allow the Claimant to consider the offer with the assistance of an interpreter. The Claimant was represented.

60       From the court file, the following observations are made:

• the claim originally sought the payment of $57,000;
• the Claimant was represented from approximately January 2018;
• an amended statement of claim sought to increase the amount claimed by approximately $15,000;
• in October 2018, the Claimant lodged a second amended statement of claim seeking payment of an amount of $39,544.64 for various alleged contraventions, a decrease of approximately $33,000 from the first amended statement of claim;
• in November 2018, the Respondents lodged an amended response to the second amended statement of claim;
• in February 2019, the Claimant lodged his witness statement;
• on 13 March 2019, the Respondents lodged three witness statements for witnesses who gave evidence at the hearing on behalf of the Respondents;
• on 13 March 2019, the parties attended at a direction’s hearing and the Respondents’ representative informed the court that the Respondents had engaged an accountant to reconcile the amount sought with an intention to put a further offer of settlement to the Claimant. On that basis the claim was adjourned to 27 March 2019 to facilitate a possible settlement;
• on 26 March 2019, the Claimant lodged three additional witness statements, including a second witness statement by the Claimant;
• on 27 March 2019, a second directions hearing occurred before Industrial Magistrate Flynn (referred to above);
• on 28 March 2019, a draft amended statement of agreed facts was lodged with the court; and
• on 2 April 2019, the parties lodged submissions and a tender bundle.

61       Therefore, by the time the parties appeared at the second directions hearing on 27 March 2019, the parties’ evidentiary and legal position ought to have been well known.

62       On 27 March 2019, Industrial Magistrate Flynn expressed concern about the proper consideration of an offer made in excess of the claimed amount. His Honour cautioned the Claimant and his representative against holding out for the payment of a civil penalty and seeking retribution. Similar comments were made at the commencement of the hearing on 3 April 2019.

63       Ultimately, at the conclusion of the hearing the Claimant was successful, in part, although significantly the Claimant was unsuccessful against Mr Johnson, unsuccessful in demonstrating that he was terminated as opposed to abandoning his employment and unsuccessful in demonstrating that he was a Cook Grade 4.

64       The amount the Claimant was found to have been underpaid (by various contraventions) was $13,679.21 of which long service leave was the most significant portion and the least significant issue (given it had been admitted). This amount is significantly less than that offered by the Respondents from 8 March 2019 onwards, significantly less than the amount claimed by the Claimant in the second amended statement of claim and approximately the same amount offered by the Respondents on 4 April 2018.

65       In fact, the amount awarded to the Claimant inclusive of a civil penalty is less than the amount offered by the Respondents from 26 March 2019 onwards.

66       At the time the offer was made on 26 March 2019 the Claimant faced not only the usual contingencies and risks associated with litigation but also held within his knowledge an appreciation of the facts of his case, including the knowledge of any weakness associated with being unable to prove to the requisite standard the termination of his employment and accessorial liability of Mr Johnson. The offer represented a commercial settlement for all parties.

67       Certainly, on 3 April 2019 the court facilitated reconsideration of the offer of settlement with the assistance of the interpreter. However, the Claimant, had he thought it necessary to do so, could have sought the assistance of an interpreter at any time prior, along with his representative, to consider any of the offers.

68       In my view, this is a case where the Claimant, contrary to observations made by the court, held out for the payment of a civil penalty in circumstances where a reasonable offer had been made in excess of the amount claimed by him. In so doing, I am satisfied, and I find, that the Claimant’s refusal of the offer from 26 March 2019 was an unreasonable act by him and that this unreasonable act caused the Respondents to incur further costs associated with and at the hearing.

69       Accordingly, I am satisfied that the Respondents have demonstrated that this is an appropriate occasion to award costs pursuant to s 570 of the Act on the basis that they have incurred costs from 26 March 2019 because of the Claimant’s unreasonable act in failing to accept the offer on 26 March 2019.

70       I am not persuaded purported tax implications as suggested by the Claimant provide a basis for his refusal of the offer where there are possible tax implications (a matter for the Commissioner of Taxation) in any event. Nothing in the associated correspondence suggests otherwise.

71       While I am satisfied that it is appropriate that the Claimant pay costs, I also recognise that the Claimant was partly successful in establishing his claim. In my view, where he was partly successful in proving his claim, I consider it appropriate he pay 50% of the Respondents’ costs incurred from 26 March 2019 to 4 April 2019 (including the hearing dates) on a solicitor/client basis (not indemnity basis).

72       The amount of costs is to be taxed if not agreed.

Orders

73       Subject to any liability (if any) to the Commissioner of Taxation pursuant to the Taxation Administration Act (Cth), the First Respondent is to pay to the Claimant within 28 days:

• $13,152.46 on account of underpayments as identified; and
• a pecuniary penalty of $27,000.

74       Further, the First Respondent is ordered to pay within 28 days:

• $526.75 in superannuation contribution to the relevant superannuation fund for the benefit of the Claimant; and
• interest on the judgment amount of $13,679.21 fixed in the amount of $2,205.94.

75       The Claimant is to pay 50% of the Respondents’ costs on a solicitor/client basis for costs incurred from 26 March 2019 to 4 April 2019 (inclusive) to be taxed if not agreed.

D. SCADDAN

INDUSTRIAL MAGISTRATE

1 The contravention period was from 1 July 2012 to September 2017 and the penalty rates per penalty unit occurred was increased over this time. I accept that the appropriate rate per penalty unit is $170 for pre-2017 monetary contraventions and $210 for post-2017 monetary and non-monetary contraventions.

2 See footnote 1.

3 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 [55] (referring to Trade Practices Commission v CSR Ltd [1990] FCA 521).

4 This case dealt with costs under s 824 of the Workplace Relations Act 1996 (Cth).

5 See ‘LL7’ - I note the letter date is 8 March 2019, however, the contents of the letter are clearly referable to the mediation on 26 March 2019 and the letter was sent to the Claimant’s representative.

Schedule I: Jurisdiction, Practice And Procedure Of The Industrial Magistrates Court (WA) Under The Fair Work Act 2009 (Cth)

Jurisdiction

[1]               An employee, an employee organisation 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 Industrial Magistrates Court (WA) (IMC), 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 a modern award

Section 535 – failing to keep prescribed records of employment

[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 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. It is not in dispute and it was found that the First Respondent is a corporation to which paragraph 51(xx) of the Constitution applies and that the Claimant was employed by the First Respondent.

[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 Act, 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; (1938) 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

[9]               The Industrial Relations Act 1979 (WA) provides that, except as prescribed by or under theFWA, the powers, practice and procedure of the IMC is to be the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): s 81CA. Relevantly, regulations prescribed under the Industrial Relations Act 1979 (WA) provide for an exception: a court hearing a trial is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit: regulation 35(4).

[10]           In Sammut v AVM Holdings Pty Ltd [No2] [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 (omitting citations):

… 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].

Schedule II: Pecuniary Penalty Orders Under The Fair Work Act 2009 (Cth)

Pecuniary Penalty Orders

[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). 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 Act: s 546(2) of the Act. 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 Act.

[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:

[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 [338] in the following terms (omitting citations):

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.

[4]          In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 [14], Tracey J adopted the following ‘non-exhaustive 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.

[5]          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 [91]).

[6]          ‘Multiple contraventions’ may occur because the contravening conduct done an employer: (a) resulted in a contravention of a single civil penalty provision or resulted in the contravention of multiple civil penalty provisions; (b) was done once only or was repeated; (c) was done with respect to a single employee or was done with respect to multiple employees.

[7]          The fixing of a pecuniary penalty for multiple contraventions is subject to s 557 of the FWA. It provides that two or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on section 323 on the payments) by an employer are taken be a single contravention if the contraventions arose out of a course of conduct by the employer. Subject to proof of a ‘course of conduct’, the section applies to contravening conduct that results in multiple contraventions of a single civil penalty provision whether by reason of the same conduct done on multiple occasions or conduct done once with respect to multiple employees: Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153; Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 [22] (White J) The section does not to apply to case where the contravening conduct results in the contravention of multiple civil penalty provisions (example (a) above): Grouped Property Services Pty Ltd (No 2) [411] ff (Katzmann J).

[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 Pty Ltd v McAlary-Smith (2008) 165 FCR 560; 246 ALR 35; [2008] FCAFC 8; [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 (Administrators Appointed) (No 2) [2016] FCA 244 [40] - [44], Mortimer J summarised the law (omitting citations and quotations) on this provision in light of Sayed:

The power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. The 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 exception’ (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553) that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.