Fair Work Ombudsman v Ramsey Food Processing Pty Ltd

REASONS FOR JUDGMENT 1 On 19 October 2011 I found that the first respondent had committed breaches of the Workplace Relations Act 1996 (Cth) ("the WR Act") and the Federal Meat Industry (Processing) Award 2000 (Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174 ("the earlier judgment")) and that the second respondent was knowingly involved in those breaches. The second respondent is to be treated, therefore, as having contravened the same provisions in his own right (see WR Act s 728(1)). The breaches involved failures to make certain payments to employees at the time their employment was terminated. It is obvious from the terms of my earlier findings that the breaches were, in my view, serious and intentional. 2 Eleven employees were involved. Ten of those employees had not been provided with the required notice of termination of employment. Ten employees had not been paid severance pay as required. Eight employees had not been paid accrued annual leave on termination of employment as required. The applicant has contended therefore that there were 28 identifiable breaches of obligations arising directly or indirectly under the WR Act and that a penalty should be fixed for each one and imposed on each of the respondents. However, s 719(2) of the WR Act provides that where two or more breaches of an "applicable provision" under the WR Act, which includes a term of an award, arise out of the same course of conduct, they are to be treated as a single breach. On one view, the failure to make any of the required payments arose from a single course of conduct. They all arose from a determination by the respondents that no payment would be made upon the termination of employment of any of the employees, or the employees as a group. However, this approach gives insufficient attention to the separate legal character of the three forms of obligation earlier identified. I am satisfied that each of those forms of obligation requires separate recognition. I am not, however, satisfied that each individual example of defiance of an obligation is permitted separate recognition. In my view the individual examples, constituted by the failure to make payments to particular individual employees, arise out of a course of conduct in each of the three instances. Any penalty must be assessed taking that into account. 3 This approach to the legislative scheme appears to me to be consistent with the approach taken in Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 and Q R Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142; [2010] FCAFC 150 on which both parties relied (see also Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Q R Limited (No 2) [2010] FCA 652 at [16]-[28]). 4 It follows that there are three matters which require a penalty to be assessed: failure to provide the requisite notice of termination of employment to ten employees; failure to pay severance pay to ten employees; and failure to pay accrued annual leave on termination of employment to eight employees. The maximum penalty available in each case is $33,000 in the case of a corporation and $6,600 in the case of an individual. 5 In fixing an appropriate penalty, in the overall circumstances of the case, I do not propose to take into account matters which arose outside the scope of the proceedings before me. As I see it, the task of the Court is to fix an appropriate penalty for the contraventions of the WR Act which I found to be established in the earlier judgment. In any event, it is unnecessary for me to go beyond an evaluation of the matters which were the subject of attention in the earlier proceedings. That is because I regard the breaches as sufficiently serious in their own right such that no higher penalty would result from giving attention to the other matters to which the applicant referred. 6 It will be apparent from the terms of the earlier judgment that the contraventions in this case were very serious in the sense that they involved a deliberate course of conduct designed, from the outset, to deny the rights of employees. Each course of conduct represented a systematic refusal to accept or honour specific legal entitlements. There is nothing that may be said in favour of the respondents in that regard. I view the present case as one closely approaching a worst possible case. While it may be said that the amounts in question were not, objectively speaking, huge, they were very significant to the individual employees. Those employees were treated callously and with flagrant disregard for their legal rights. 7 In the earlier judgment, apart from concluding that arrangements intended to shield the first respondent from responsibility to meet employee entitlements were ineffective to do so, I concluded also that the arrangements were a sham and deceitful. In that connection I said the following: 115 I have no doubt that the arrangements concerning Tempus had their genesis in two objectives on the part of Mr Ramsey. The first was to create an occasion for the apparent "termination" of employment of all the "employees" of the Ramsey "employing" companies, thereby permitting the liquidation of the companies and the extinguishment (so it has been thought) of any liability owed by them, whether to employees or under the orders made by Greenwood J. The second objective was to ensure that Ramsey Food Processing would not become directly liable to employees for their entitlements, whether already accrued or to be accrued. The arrangements to achieve these objectives were devoid of any legal content. They represent an attempt to prevail by form, over any substance. They were a sham. 116 I also have no doubt that Mr Ramsey, and Ramsey Food Processing under his control, have endeavoured to shelter behind the arrangements to dishonour and deny the commitment, voluntarily made, that Tempus would be fully indemnified in its apparent obligations towards employees. It was Mr Ramsey who decided that the indemnity would not be honoured … 117 The respondents thereby rejected the indemnity freely given to Tempus as an integral part of the arrangement and dishonoured the promise that Ramsey Food Processing would stand behind Tempus and make good obligations to employees at the abattoir incurred in its name. The ready rejection of these obligations also supports the conclusion that the arrangements were, from first to last, a sham. … 121 ... The establishment of Tempus had its origins in deceit. Later, despite the assurances given to Mr Considine, the written indemnity, the fact that accrued entitlements were shown in the books kept for Tempus and that money was received into the Tempus bank account sufficient to cover all the obligations identified in the present proceedings, persons acting on behalf of Ramsey Food Processing acted to frustrate, deny or defeat the entitlements of employees identified in the present proceedings. The matters relied on to justify this conduct were based, from beginning to end, on deceit and on a "sham" arrangement. ... … 124 I have no doubt that Mr Ramsey was involved in and complicit in the steps which were taken, first to terminate the employment of the complainant employees and then to deny them their legal entitlements from the time of that termination. … 126 Not only was Mr Ramsey involved in any contravention committed by Ramsey Food Processing, he was its guiding mind. He is wholly concerned in and responsible for the contraventions by Ramsey Food Processing. He is liable in his own right as an accessory. … 146 … It was not disputed by Mr Ramsey that each of the complainant employees had outstanding, unsatisfied entitlements. Each of them was, at the direction of Mr Ramsey (on his own admission) denied payment of their outstanding entitlements: first, by the refusal of Ramsey Food Processing to observe the pre-existing arrangements for payment, through the Tempus account, of employee entitlements; secondly, by the refusal of Ramsey Food Processing to observe or honour the indemnity given by it to Tempus; thirdly, by the steadfast refusal of Ramsey Food Processing, under the control of Mr Ramsey, to respond to the claims made on behalf of the complainant employees by the applicant; and last of course by the approach taken to the present proceedings. 8 A submission was made by the respondents that some consideration should be given to reducing the amount of the penalty imposed on one or other of the respondents to account for the intimate connection between the actions of the first respondent and the conduct of the second respondent. As I understood the submission, it was that there was a risk of punishing twice for the same conduct - i.e. punishing both the first and second respondents for the conduct of the second respondent. The submission appeared to rely on the judgment of Mansfield J in Australian Prudential Regulation Authority v Holloway (2000) 45 ATR 278; [2000] FCA 1245, although I do not understand how it could do so. In that judgment Mansfield J fixed lesser penalties on Mr Holloway, the "alter ego" of Holloway & Co, than on Holloway & Co. In the legislative scheme which his Honour was applying no distinction was made between the maximum penalty that could be applied to corporations and the maximum penalty that could be applied to individuals. That is not the case here. The present legislative scheme fixes quite different (and much lower) penalties for individuals than for corporations. The culpability of each respondent must be assessed individually and in the context set by the maximum penalty prescribed in each case. I reject the suggestion, if this was what was intended, that either or both respondents might have the benefit of any reduction in penalty because they were jointly, as well as individually, culpable. 9 Nothing that was put on behalf of the respondents provides any reason to ameliorate the penalties. I regard the breaches in this case as very serious. They appear to me to have involved a deliberate, calculated and systematic refusal to comply with the requirements of the WR Act and to take advantage of the vulnerability of the complainant employees. The maximum penalty fixed by legislation is generally regarded as representing what Parliament intends to be the appropriate punishment for the "worst possible case". It is only the fact that my mind has a natural resistance to the idea that things could never be worse that prevents me from imposing the maximum penalty on each of the respondents in the present case. 10 The total maximum penalties available are $99,000 against the first respondent and $19,800 against the second respondent. I fix a penalty for each of the three contraventions I have found established of $32,000 against the first respondent (a total $96,000) and $6,400 against the second respondent (a total $19,200). I am satisfied that the penalties in the aggregate do not offend against the totality principle. The penalties are to be paid within 14 days. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.