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Inspector Curyer v Bizpro SA Pty Ltd & Anor [2009] FMCA 30 (29 January 2009)

Last Updated: 2 February 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

INSPECTOR CURYER v BIZPRO SA PTY LTD & ANOR

INDUSTRIAL LAW – Penalty hearing – admitted contraventions of Workplace Relations Act 1996 (Cth) – underpayment of wages – failing to pay wages in timely fashion – failure to pay annual leave – relevant considerations – penalty determined.

Crimes Act 1914 (Cth), ss.4(1) and 4AA
Workplace Relations Act 1996 (Cth), ss.182(1), 182(3), 185(2), 189(1), 189(3), 189(3)(b), 235(2), 719(4)(a), 719(1), 728 and 841

Armstrong v Bigeni Contracting Pty Ltd & Anor [2008] FMCA 485
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Dowling v Kirk & 16 Ors [2007] FMCA 2106
Kelly v Fitzpatrick [2007] FCA 1080
Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; (1984) 3 FCR 503
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Printing and Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 127 ALR 673
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Salandra v Risborg Services Pty Ltd & Ors [2008] FMCA 76

Applicant:
INSPECTOR KATHERINE CURYER (OFFICE OF WORKPLACE OMBUDSMAN)

First Respondent:
BIZPRO SA PTY LTD (ACN 111 862 410) IN LIQUIDATION

Second Respondent:
SAMUEL JOHN ADCOCK

File Number:
ADG 321 of 2007

Judgment of:
Simpson FM

Hearing date:
16 May 2008

Date of Last Submission:
16 May 2008

Delivered at:
Adelaide

Delivered on:
29 January 2009

REPRESENTATION

Counsel for the Applicant:
Mr MG Evans QC

Solicitors for the Applicant:
Finlaysons Lawyers

Counsel for the Respondents:
Mr JK Warren

Solicitors for the Respondents:
Fisher Jeffries

ORDERS

(1) The second respondent pay the following penalties for breaches of the Workplace Relations Act 1996 (Cth):
(2) The penalties shall be paid by the second respondent as follows:
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADG 321 of 2007

INSPECTOR KATHERINE CURYER (OFFICE OF WORKPLACE OMBUDSMAN)

Applicant


And


BIZPRO SA PTY LTD (ACN 111 862 410) IN LIQUIDATION

First Respondent

SAMUEL JOHN ADCOCK

Second Respondent


REASONS FOR JUDGMENT

  1. This is an application by a Workplace Inspector for the imposition of penalties for breaches of the Workplace Relations Act 1996 (Cth) (“the Act”) filed in the Adelaide Registry of the Federal Magistrates Court of Australia on 12 November 2007. The proceedings were brought against the first respondent Bizpro SA Pty Ltd as the employer of two employees namely Mr Michael Sark and Ms Eden DyGuazo and Bizpro’s sole director, secretary and shareholder, the second respondent Samuel John Adcock. The applicant does not now wish to proceed against the first respondent as it was placed in liquidation on 24 January 2008.
  2. The applicant alleges that the second respondent was involved in the first respondent’s contraventions of the Act and therefore, pursuant to s.728 of the Act, the second respondent is himself liable to pecuniary penalties. The applicant’s application sought the following final orders:
  3. The applicant’s case against the first respondent is that it:
  4. The second respondent admits that the first respondent committed these breaches and that pursuant to s.719(1) of the Act he is liable to penalties for his involvement in the first respondent’s contraventions.
  5. The matter proceeded as a penalty hearing with the parties putting the following material before the Court:
    1. Revised statement of agreed matters (Exhibit A1);
    2. Further revised statement of agreed matters (Exhibit A2);
    1. Statement of agreed matters (Exhibit A3);
    1. Statement of agreed matters arising from the affidavit of Eden DyGuazo dated 3 April 2008 and affidavit of Michael Sark dated 3 April 2008 (Exhibit A4);
    2. Affidavit of Katherine Curyer sworn 9 November 2007 and filed on 12 November 2007 (Exhibit A 5);
    3. Supplementary affidavit of Katherine Curyer sworn 3 April 2008 and filed 4 April 2008 (Exhibit A6);
    4. Affidavit of Wayne John Smith sworn 9 May 2008 and filed the same day (Exhibit A7);
    5. Affidavit of Michael Sark sworn 3 April 2008 and filed on 4 April 2008 (Exhibit A8);
    6. Affidavit of Eden DyGuazo sworn 3 April 2008 and filed on 4 April 2008 (Exhibit A9);
    7. Extract from Clerk’s (SA) Award showing provision for frequency of payments (Exhibit A10);
    8. Profit and loss statement of the first respondent for 2005/2006 financial year (Exhibit R1);
    1. Projected profit and loss document for 2006/2007 financial year (Exhibit R2);
    1. ASIC document concerning the first respondent (Exhibit R3); and
    2. Report of Dr James Moxham dated 12 May 2008.
  6. In these reasons statements of fact are findings of fact made on the balance of probabilities on the basis of admissions made and the material referred to above.
  7. The second respondent is 41 years of age and married with three children. Since about 1998 he has been running a computer business. In November 2004 he took steps to have the first respondent incorporated. He thereafter operated his business through the first respondent.
  8. The first respondent was a provider of hardware, software and computer training for hospitality, café and other retail businesses. Until June 2006 the business was conducted from the second respondent’s home. When the first respondent was incorporated the second respondent was for quite some time the first respondent’s sole employee.
  9. By early 2006 it seemed to the second respondent that the business was proving successful as there was more than enough work to keep the second respondent very busy. At that point in time the second respondent was optimistic about the business.
  10. In about May 2006 the second respondent met the first of the employees that we are concerned with here, Michael Sark. The second respondent was impressed with Mr Sark’s familiarity and ability with computers and he offered him employment with the first respondent. Mr Sark accepted. A written contract of employment was entered and Mr Sark commenced his employment with the first respondent on 26 June 2006. His title was Retail Manager/Retail Hospitality Consultant. He was employed on a permanent full time basis from 26 June 2006 and was to be paid weekly. He eventually resigned his employment with the first respondent effective 3 November 2006.
  11. Soon after Mr Sark commenced employment with the first respondent he spoke with the second respondent about the possibility of the second employee that we are concerned with here, Ms Eden DyGuazo, being employed by the first respondent in an administrative capacity. At this point in time the second respondent was still optimistic about the future for the business. For other reasons personal to the second respondent that it is unnecessary for me to go into at this stage, it suited the second respondent to have an additional person working for the company on a part time basis. The second respondent offered Ms DyGuazo casual employment as an office administrator with the first respondent commencing on 12 July 2006. No formal written contract was signed or provided, but the terms of the employment were agreed upon between the second respondent and Ms DyGuazo. Ms DyGuazo resigned her employment with the first respondent effective 1 November 2006.
  12. During Mr Sark’s employment he was paid irregularly, and was often paid less frequently than weekly. Further, Mr Sark was often paid less than he was legally entitled. After Mr Sark resigned his employment the first respondent failed to pay Mr Sark his accrued annual leave entitlements.
  13. Throughout Ms DyGuazo’s employment she also was paid irregularly, often less frequently than weekly and was also often paid less than she was entitled. These underpayments were a result of the first respondent not paying her at the appropriate hourly rate and not paying the casual loading that she was entitled to.
  14. The first respondent was bound by and breached the following provisions of the Act:
    1. s.182(3) of the Act by failing to pay Mr Sark a basic rate of pay for hours worked between 25 June 2006 and 3 November 2006 inclusive;
    2. s.235(2) of the Act by failing to pay Mr Sark his accrued annual leave upon termination of employment;
    1. s.189(3) of the Act by failing to pay Mr Sark on a weekly basis;
    1. s.182(1) of the Act by failing to pay Ms DyGuazo a basic rate of pay for hours worked between 12 July 2006 and 1 November 2006 inclusive;
    2. s.185(2) of the Act by failing to pay Ms DyGuazo a casual loading for hours worked between 12 July 2006 and 1 November 2006 inclusive; and
    3. s.189(1) of the Act by failing to pay Ms DyGuazo on a weekly basis.
  15. The second respondent admits that he was involved in the first respondent’s contravention within the meaning of s.728 of the Act and that he is therefore to be himself treated as having contravened those provisions. I have considered all of the material put before me and have satisfied myself that it was appropriate for the second respondent to make these admissions. I am satisfied that the first respondent was bound by and breached the provisions referred to. I am also satisfied that the second respondent is a person involved in the first respondent’s contraventions and should therefore be treated as having contravened the provisions (see Dowling v Kirk & 16 Ors [2007] FMCA 2106; Armstrong v Bigeni Contracting Pty Ltd & Anor [2008] FMCA 485).
  16. The particular provisions that we are concerned with in this case arise under the terms of the Australian Fair Pay and Conditions Standard to be found in Part 7 of the Act. Mr Sark and Ms DyGuazo were entitled to the guarantee of basic rates of pay as provided for in s.182(1) and 182(3) of the Act in respect of their employment with the first respondent. Mr Sark was entitled to be paid weekly pursuant to s.189(3)(b) of the Act (and also pursuant to his contract of employment). Mr Sark was also entitled to be paid his accrued annual leave upon termination of employment with the first respondent in accordance with s.235(2) of the Act. Ms DyGuazo was entitled to be paid weekly pursuant to s.189(1) of the Act (see also Clerks (South Australia) Award as at 26 March 2006 Clause 5.6.1). The first respondent breached ss.182(3), 235(2) and 189(3) in relation to Mr Sark and ss.182(1), 185(2) and 189(1) in relation to Ms DyGuazo on a number of occasions. It is properly conceded by the applicant that the breaches arose out of a course of conduct by the first respondent and should therefore, pursuant to s.719(2) of the Act, be taken to constitute single breaches of each applicable term.
  17. The non-exhaustive list of factors that might be considered by a court imposing a penalty for contraventions such as we are dealing with here were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 and numerous other cases. They are now well known and are as follows:
    1. The nature and extent of the conduct which lead to the breaches;
    2. The circumstances in which the conduct took place;
    1. The nature and extent of any loss or damage sustained as a result of the breaches;
    1. Whether there had been similar previous conduct by the respondent;
    2. Whether the breaches were properly distinct or arose out of the one course of conduct;
    3. The size of the business enterprise involved;
    4. Whether or not the breaches were deliberate;
    5. Whether senior management was involved in the breaches;
    6. Whether the party committing the breach had exhibited contrition;
    7. Whether the party committing the breach had taken corrective action;
    8. Whether the party committing the breach had cooperated with the enforcement authorities;
    1. The need to ensure compliance with minimum standards by provision of an effective means for investigating an enforcement of employee entitlements; and
    1. The need for specific and general deterrence.
  18. To these considerations in the circumstance of this case I would add:
    1. The fact that the party has admitted the breaches of the applicable provisions; and
    2. If the party is an individual, the character, antecedents, age, means and physical or mental condition of the party.
  19. I do not propose to repeat what I said earlier in these reasons in relation to the nature and extent of the conduct complained of and the circumstances in which the conduct took place. Clearly the underpayments and irregularity of payments in relation to each of the employees was deliberate and ongoing. It is reasonable to infer that the breaches would have continued had the employees concerned not terminated their employment with the first respondent. I do not accept the submission on behalf of the applicant that I should find that the second respondent encouraged the employees to continue working for the first respondent for as long as they did. Such a finding is not reasonably open on the evidence.
  20. I accept the second respondent’s submission that, when he employed each of the two employees that we are here concerned with, he honestly believed that the business would have sufficient cash flow to be able to meet its financial commitments to them. I accept also that even when the second respondent started to realise that the first respondent was not able to meet its then financial obligations to the employees, nevertheless he believed that the business was going to improve and that the first respondent would then be able to pay the employees their entitlements. By August or September 2006 the second respondent realised that his assessment of the first respondent’s financial position was not accurate.
  21. Mr Sark should have been paid $8,832.79 between June and November 2006 but was only paid $4,584.29. Ms DyGuazo should have been paid $6,477.22 between July and November 2006 but was only paid $3,438. Both have since been paid the monies that they were entitled to be paid. This occurred on 9 May 2008. They have not received any interest in relation to the underpayments. They were each kept out of the monies they were entitled to for about 18 months. It is suggested by Counsel for the applicant and not disputed by Counsel for the respondent that appropriate amounts for interest for each of Mr Sark and Ms DyGuazo would be $423 and $204 respectively. I propose to make an order that these sums be paid to the two employees out of the penalties that will be payable.
  22. In deciding what penalties are appropriate in this case it is appropriate for me to take into account the fact that the severe cash flow difficulties that the first respondent had in the latter part of 2006 were the sole cause of the breaches occurring. I am satisfied that if the first respondent had sufficient cash flow that the second respondent would have ensured that the first respondent paid Mr Sark and Ms DyGuazo their lawful entitlements in a timely fashion.
  23. The first respondent was a small company and is now in liquidation. The second respondent is not in a strong financial position. He and his wife both work. They have three young children. They have a combined income of $72,000 per year. They owned a home at Glenalta but sold it in 2003 to pay off their existing debts. They have been renting since then. They do not have significant assets other than their household effects and two motor vehicles. The second respondent now works for himself and has no intention of incorporating a company or of engaging employees.
  24. I nevertheless take note of what was said by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at para.28:
  25. In Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at paras.27-29 His Honour Driver FM said:
  26. In Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; (1984) 3 FCR 503 at 508 Keely J said:
  27. In Printing and Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 127 ALR 673 at 688 Wilcox CJ said:
  28. I take note of the fact that the second respondent wrote to the applicant by letter of 9 March 2007 in response to her preliminary finding earlier sent to him in which he admitted the alleged breaches and promised to make payment to Mr Sark and Ms DyGuazo and in fact provided a payment plan for the sum owing to each of the employees. I note also however that it was not until shortly before the trial was due to commence (and therefore after the preparation and filing of evidence and detailed submissions) that the second respondent made the back payments. The applicant has therefore been put to significant expense and inconvenience and the employees kept out of their entitlements for longer than would otherwise have been the case. It is however a significant matter in the second respondent’s favour that he has taken personal responsibility to ensure that the two employees will not be financially disadvantaged as a result of the first respondent going into liquidation. He did not have to do so and it is very much to his credit that he did.
  29. In Kelly v Fitzpatrick Tracey J said:
  30. I take note of the principal object of the Act to be found in s.3, namely:
  31. I take note also of the stated methods by which the Act seeks to achieve the principal object including by providing an economically sustainable safety net of minimum wages and conditions, by ensuring compliance with minimum standards, industrial instruments and bargaining processes and by providing effective means for investigating and enforcement of employee’s entitlements, rights and obligations.
  32. I accept that the penalty in this matter must reflect the need for general deterrence and in the circumstances of this case, the need for specific deterrence concerning the second respondent (see Salandra v Risborg Services Pty Ltd & Ors [2008] FMCA 76 at paras.46-48). It is fair to say that the need for general deterrence is particularly high in industries such as those operating here where young, low paid, vulnerable workers are often engaged (see Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412).
  33. In considering penalty I must consider the principal of totality. I must “... determine an appropriate level of penalty for each contravention, as if it were a separate offence and then ... look at the aggregate of those penalties in the light of the overall conduct of the [second respondent], to form a view as to whether that aggregate was out of proportion to that overall conduct” (see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at para.23 and see also paras.18-25, 50-54 and 66-70).
  34. Section 719(4)(a) of the Act prescribes the maximum penalty that may be imposed by this Court to be, in the case of an individual, 60 penalty units. Section 4(1) of the Act provides that “penalty unit” has the same meaning as in the Crimes Act 1914 (Cth) (“the Crimes Act”). Section 4AA of the Crimes Act defines “penalty unit” to be $110. The maximum penalty that may be imposed by the Court for a breach by an individual is therefore $6,600.
  35. Having regard to the above matters I consider the appropriate penalties for each of the breaches to be:
  36. I order pursuant to s.841 that the penalties be paid as follows:
  37. I make the orders to be found at the beginning of these reasons.

I certify that the preceding 37Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !thirty-seventhirty-seven (37) paragraphs are a true copy of the reasons for judgment of Simpson FM


Associate: Ms J. Davey


Date: 29 January 2009

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