2021 WAIRC 00169
WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT


CITATION : 2021 WAIRC 00169

CORAM
: INDUSTRIAL MAGISTRATE J. HAWKINS

HEARD
:
ON THE PAPERS

DELIVERED : WEDNESDAY, 23 JUNE 2021

FILE NO. : M 109 OF 2020

BETWEEN
:
MARK RYAN
CLAIMANT

AND

WA PALLETS PTY LTD
RESPONDENT

CatchWords : INDUSTRIAL LAW – Assessment of pecuniary penalties for contravention of the Fair Work Act 2009 (Cth) – section 323 and s 90(2) of the Fair Work Act 2009 (Cth)
Legislation : Fair Work Act 2009 (Cth)
Industrial Magistrates Court (General Jurisdiction) Regulations 2005 (WA)
Supreme Court Act 1935 (WA)
Rules of the Supreme Court 1971 (WA)
Industrial Relations Act 1979 (WA)
Crimes Act 1914 (Cth)
Case(s) referred
to in reasons: : Ryan v WA Pallets Pty Ltd [2021] WAIRC 00111
Commonwealth of Australia v Director, Fair Work Building and Industry Inspectorate [2015] HCA 46
Civic Video Pty Ltd v Paterson [No 3] [2014] WASC 321
Haines v Bendall [1991] HCA 15: (1991) 172 CLR 60
Ryan v Primesafe [2015] FCA 8
Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509
Miller v Minister of Pensions [1947] 2 All ER 372
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008)165 FCR 560
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
Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4
Result : Penalties and interests imposed
REPRESENTATION:

CLAIMANT : MR P. MULLALLY (AGENT) FROM WORKCLAIMS AUSTRALIA
RESPONDENT : MR S. HEATHCOTE (OF COUNSEL) FROM APX LAW

SUPPLEMENTARY REASONS FOR DECISION
Introduction
1 By reasons delivered on 23 April 2021 part of Mr Mark Ryan’s (Mr Ryan) claim against WA Pallets Pty Ltd (WAP) was dismissed. However, during the course of trial the parties agreed to a portion of the claims made by Mr Ryan being paid to him. It was therefore ordered by consent on 10 February 2021 that WAP pay to Mr Ryan the sum of $2,826.91 being made up as follows:
· $3,508.19 (agreed annual leave) + $990 (agreed wages) = $4,498.19 less $1,672.00 (being a disputed deduction of two weeks’ wages which was the subject of final determination) = $2,826.91.
2 These supplementary reasons for decision are in relation to Mr Ryan’s application for payment of interest, pecuniary penalties and costs.
3 Mr Ryan’s claim for pecuniary penalties relates to the failure of WAP to pay Mr Ryan one week’s wages at termination, being a contravention of s 323 of the Fair Work Act 2009 (Cth) (FW Act) which is a civil penalty provision pursuant to item 10 of s 539(2) of the FW Act. Further, Mr Ryan says that WAP failed to pay untaken annual leave at the end of his employment, being a contravention of s 90(2) of the FW Act. This forms part of the National Employment Standards (NES) and is therefore a contravention of s 44 of the FW Act and is dealt with at item 1 of s 539(2) of the FW Act.
4 Schedule 1 and sch 2 of these supplementary reasons outline the jurisdiction practice and procedure of the Western Australian Industrial Magistrates Court (IMC) under the FW Act and the principles relevant in determining an appropriate penalty (if any) under the FW Act.
5 The maximum penalty for each of the alleged contraventions is as follows:
· Section 323 of the FW Act is a civil penalty provision, contravention of which is dealt with in item 10 of s 539(2) of the FW Act. Item 10 carries a maximum penalty of 60 units or five times that amount for the body corporate: s 546(2) of the FW Act. The penalty unit as of 1 July 2020 is $222 and, therefore, the maximum penalty for this contravention is $66,600.
· Contravention of s 90(2) of the FW Act is a contravention of the NES, which is dealt with under item 1 of s 539(2) of the FW Act. Item 1 carries a maximum penalty of 60 units or five times that amount for a body corporate: s 546(2) of the FW Act. The penalty unit as of 1 July 2020 is $222 and, therefore, again, the maximum penalty is $66,600.
6 The parties provided written outlines of submissions.
Submissions On Penalty From The Parties
7 In summary, Mr Ryan submits that:
· His employment was for a relatively short period.
· The contraventions occurred at the end of Mr Ryan’s employment when he resigned on 30 June 2020 without giving notice. The loss suffered by Mr Ryan was not insignificant as he was employed on $22 an hour and the underpayments to him of $2,826.91 was a serious sum.
· There had been no evidence of previous similar conduct by WAP.
· The contraventions arose due to altercations which took place on 30 June 2020 and 1 July 2020.
· The contraventions were deliberate in circumstances where WAP considered their actions justifiable, but they accepted, at the commencement of trial, the subject of the contraventions.
· The employer was a small business and the director was involved in the breaches.
· WAP has shown contrition given the concession in respect to payment of the entitlements at the commencement of trial.
· The breach of s 323 of the FW Act, contravention concerned under payment of $990, falls at the lower end of the scale and a penalty of $1,000 is appropriate.
· For the breach of s 90(2) the amount of underpayment was $3,649 and suggests that the penalty of $1,500 is appropriate as the contravention, again, lies at the lower end.
· Allowing for issues of totality, Mr Ryan says that payment of $2,500 is proportionate to the contraventions and the penalty should be payable to Mr Ryan.
8 In summary, WAP submits, in brief, that its conduct can be characterised as falling at the lowest end of seriousness and as a result only a minimal penalty is required. WAP concedes that the penalties sought by Mr Ryan are within the lower range.
Determination
9 The following considerations are significant in assessing penalties in this case.
10 Mr Ryan was required to bring a claim for the concessions made at the commencement of trial in respect to the two contraventions meant that he was not required to prove his claim.
11 Further, the contraventions in respect to both underpayment of wages and annual leave largely can be characterised as WAP’s ignorance of the law. WAP is a small business and once properly advised, WAP conceded the contraventions as claimed. However, ignorance and complacency of the law affords no mitigation.
12 The two contraventions can be properly characterised as a single contravention which flowed from WAP’s ignorance and complacency of the law. It also arose largely as a result of the events that occurred between the parties on 30 June 2020 and 1 July 2020, which has been set out in the Ryan v WA Pallets Pty Ltd [2021] WAIRC 00111. There is no evidence that WAP exploited or profited from the non-payment to Mr Ryan.
13 WAP operates a small business and there is evidence by the director, Mr Jeb Cole, that he has learned through this process. Accordingly, specific deterrence is low.
14 Like all contraventions, however, general deterrence is an important factor. A civil penalty promotes the public interest in compliance with the law. It is not additional compensation for financial or emotional stress, hurt feelings, inconvenience or legal fees. Commonwealth of Australia v Director, Fair Work Building and Industry Inspectorate [2015] HCA 46 [55]
The offending in all the circumstances is properly characterised as falling in the lower range and proper remorse has been shown.
15 The amounts unpaid to Mr Ryan, as a relatively low wage earner, was not insignificant and because of the factors referred to above a caution is not appropriate nor is imposing no penalty whatsoever. Although the contraventions arose primarily out of the same course of conduct, they were separate and distinct contraventions. Allowing for principles of totality and the concession by WAP that the penalties sought by Mr Ryan are within the lower range, I will, therefore, impose the following penalties:
· $1,000 for the failure to pay wages in full pursuant to s 323 of the FW Act.
· $1,500 for the breach of s 90(2) of the FW Act.
16 I am satisfied that it is appropriate that the penalties be paid to Mr Ryan.
Interest
17 The power to award interest is set out at reg 12(4) of the Industrial Magistrates Court (General Jurisdiction) Regulations 2005 (WA) (Regulations).
18 Regulation 12(1)(a) of the Regulations refers to the rate of interest published under s 142 of the Supreme Court Act 1935 (WA) (Supreme Court Act). Section 142 of the Supreme Court Act was repealed. Section 32 of the Supreme Court Act and O 36 r 20 of the Rules of the Supreme Court 1971 (WA) applies and the current interest rate on pre-judgment awards set by those provisions is 6% per annum.
19 An award of interest up to the date of judgment is an award in the nature of damages and is compensatory in character. Civic Video Pty Ltd v Paterson [No 3] [2014] WASC 321; Haines v Bendall [1991] HCA 15: (1991) 172 CLR 60, 66 (Mason CJ, Dawson, Toohey and Gaudron JJ) citing Fire and All Risk Insurance Company Ltd v Callinan (1978) 140 CLR 427, 431

20 The period of interest runs from the date of termination 1 July 2020 to 24 February 2021, when it was ordered that the sum of $2,826.91 be paid to Mr Ryan, which equals 238 days. For those reasons, therefore, I will order the sum of $110.60 in interest be paid on the judgement sum.
Costs
21 The IMC may only award costs incurred by another party to the proceedings in accordance with s 570(2) of the FW Act. The principles relevant to the award of costs are discussed in Ryan v Primesafe [2015] FCA 8 and Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509. Mr Ryan has not submitted that any of the matters referred to in s 570(2) of the FW Act apply. The authorities to which I have referred to make clear that the discretion to award costs should be exercised cautiously and in the clearest of cases. This is not such a case. I am not satisfied that any of the matters referred to in s 570(2) of the FW Act have been made out. It follows that no order for costs should be made.
Orders
22 For the reasons set out above, I make the following orders:
1) That WAP pay to Mr Ryan by way of penalties the sum of $2,500.
2) That WAP pay to Mr Ryan the sum of $110.60 in interest.
3) There be no order as to costs.



J. HAWKINS
INDUSTRIAL MAGISTRATE





Schedule 1: Jurisdiction, Practice And Procedure Of The Western Australian Industrial Magistrates Court 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 FW Act. The Western Australian Industrial Magistrates Court (‘IMC’ or ‘the Court’), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12 of the FW Act (see definitions of ‘eligible State or Territory court’ and ‘magistrates court’); Industrial Relations Act 1979 (WA) s 81 and 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 FW Act.
[3] The civil penalty provisions identified in s 539 of the FW Act include:
· Section 44 of the FW Act;
· Section 535 of the FW Act; and
· Section 536 of the FW Act.
[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 and s 12 of the FW Act. 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 FW Act. It is not in dispute and it was found that WAP is a corporation to which paragraph 51(xx) of the Constitution applies and that Mr Ryan was employed by WAP.
[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 FW Act.
Burden and standard of proof
[6] In an application under the FW Act, Mr Ryan 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 FW 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.

Schedule 2: Pecuniary Penalty Orders Under The Fair Work Act 2009 (Cth)
Pecuniary penalty orders
[1] The FW Act provides that the Court 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 the FW Act. 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 FW Act: s 546(2) of the FW 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 FW Act.
[2] The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): s 12 of the FW Act. The relevant rate is that applicable at the date of the contravening conduct:
Before 28 December 2012
$110
Commencing 28 December 2012
$170
Commencing 31 July 2015
$180
Commencing 1 July 2017
$210
Commencing 1 July 2020
$222
[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; (2007) 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; (2008)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; and
(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 FW Act. It provides that two or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on s 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): Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 [411] (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] FCAFC 8; (2008) 165 FCR 560 [47] - [52].
[9] Section 546(3) of the FW Act 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 v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4:
[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] … exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.