C.4. Payment of penalties
158 The applicants submitted that orders should be made providing for the penalties to be paid directly to each of them, in equal amounts, pursuant to s 546(3)(c) of the Act.
159 The respondents submitted that orders should be made directing that the penalties be paid into the Consolidated Revenue Fund of the Commonwealth pursuant to s 546(3)(a) of the Act. The respondents submitted that given that compensation orders are to be made in favour of the applicants, it would not be appropriate to also make orders that the penalties be paid to them. They submitted that the Court should not exercise its discretion to make such orders, given (a) the quantum of the proposed penalties to be imposed, (b) the Fair Work Division is generally a no costs jurisdiction and payments of penalties to compensate for otherwise unrecoverable legal costs would be an illegitimate windfall, and (c) the applicants had failed to establish the "working 12 hour a day, six days a week" allegations that their counsel had submitted in opening was "one of the main issues" to be determined and in circumstances where Mr Basi had deleted data from a Fair Work Ombudsman mobile application.
160 The usual order when proceedings for contraventions of the Act are not brought by the Fair Work Ombudsman is that penalties are paid to the applicant: Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241 at 245-246 (Northrop J); Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216; [1992] FCA 553 at 223-224 (Gray J).
161 Section 546(3) of the Act provides that:
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.
162 Section 539(2) authorises persons named in the table to s 539(2) to apply for orders in relation to contraventions of the provisions identified in the table. These persons, relevantly, include for contraventions of s 44(1), s 45, s 323 and s 325, "an employee", and for contraventions of s 343 and s 344, a "person affected by the contravention".
163 In National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451, Gray J stated at [146]:
Pursuant to s 546(3)(b) of the Fair Work Act, the court has power to order that the pecuniary penalty, or part of it be paid to a particular organisation. In a case in which a union has instituted a proceeding to enforce the rights of one of its members, an order that a resulting penalty be paid to that union is the usual order. The scheme under which the enforcing party is the recipient of the penalty is designed to encourage the enforcement of provisions of the Fair Work Act and of agreements and other instruments made under it. Even though Professor Bessant is also an applicant in the proceeding, it is still appropriate to order that the whole of the penalty imposed be paid to the NTEU.
164 More recently, the Full Court of this Court in Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336; [2016] FCAFC 4 (Tracey, Barker and Katzmann JJ) confirmed that the application of the "usual order" was not limited to a union and was equally applicable in the case of an individual applicant. Their Honours stated:
72 One may begin to understand, therefore, why it is that s 546(3), in Pt 4.1, Div 2, Subdiv B, empowers the Court to order that a pecuniary penalty, or a part of the penalty, be paid to the Commonwealth, a particular organisation, or a particular person. If a proceeding for contravention of s 351(1) is brought by the inspector, the inspector being a public official of the Commonwealth, it may be expected that ordinarily the pecuniary penalty would be paid to the Commonwealth. If a union were to bring the proceeding successfully, for the benefit of its members, it may be expected that the penalty would be paid to the union. If the union brought the proceeding for the benefit of a particular member, there might be payment of the penalty to that member, on the basis he or she is a particular person to whom it should be paid; or part payment to that member and the balance to the union. If a person individually affected by a contravention brought the proceeding, then the penalty may be paid to him or her as a particular person. There is a certain symmetry between the person or entity authorised to prosecute an enforcement proceeding and the person or entity to whom the penalty, if imposed, might be paid. This symmetry is recognised by the Explanatory Memorandum and authority.
73 For example, the Explanatory Memorandum, by para 2157 (set out above) expressly notes that:
Ordinarily, any pecuniary penalty awarded by the court is paid to the applicant or, in the case of proceedings brought by a Commonwealth official such as an inspector, to the Commonwealth (on the basis that the applicant represents the Commonwealth).
165 Their Honours also addressed at length concerns about the usual order giving rise to a potential windfall in circumstances where a parties legal costs were otherwise not recoverable, observing at [119] that:
Accepting that legal expenses should not be taken into account in considering "the true cost" of bringing such a prosecution because of the stipulation in s 570 that a party's legal costs are not recoverable except in circumstances not applicable here, there can be no doubt that Mr Sayed, in bringing and maintaining the prosecution of the union, and in dealing with the solicitors he instructed and the counsel they briefed, must have incurred considerable time, trouble and lost opportunity, not to mention the real risk to his career that Mr Sayed assumed in running the proceeding.
166 Their Honours then concluded:
120 To the extent that the primary judge appears to have drawn a distinction, at [88]-[89], between a case prosecuted by a union or other representative organisation and one prosecuted by the person directly affected by the contravention(s), we fail to see how that distinction, of itself, should lead to any immediate assumption or conclusion that the individual, by contrast to an organisation, has not, or has not necessarily, incurred significant time, trouble and lost opportunity costs in maintaining the prosecution, so that in the absence of some disentitling feature, the usual order for payment of the penalty to the prosecutor is appropriate.
121 Furthermore, it is not apparent to us why the receipt of a penalty should not operate as an incentive to an affected person to bring a prosecution like this under the FW Act. After all, as Wilcox J noted in Finance Sector Union, it ensures the enforcement of the legislative scheme. Moreover, as Jessup J put it in Murrihy, this incentive to bring and maintain such a proceeding makes it more likely that the applicable provisions of the FW Act "will be more than mere words on the statute book". As Gray J said in Plancor, the question of "profit" does not arise on a proper construction of the power.
167 I am satisfied that the applicants are relevantly "employees" and "persons affected by the conduct" and that it is appropriate, consistently with the foregoing statements of principle in Sayed, that the pecuniary penalty orders be made payable, in equal amounts, to each applicant. I am not persuaded that the failure of the applicants to establish the "working 12 hours a day, six days a week" allegation relevantly should disentitle them to orders that the pecuniary penalties be paid to them. The applicants have established that the respondents engaged in egregious and flagrant contraventions of civil penalty provisions of the Act.
168 I have concluded that the payment of penalties, should be made in equal amounts to each applicant because the seriousness and extent of the contraventions on the applicants was broadly equivalent. Many but not all contraventions were common to both applicants. I am satisfied, however, that any attempt to separately assess the respective weight and seriousness of the contraventions that were bespoke to each applicant would be illusory and would not be supported by any principled or empirical rationale.