FAIR WORK OMBUDSMAN v REVOLUTION MARTIAL ARTS PTY LTD & ANOR

[2013] FMCA 125

INDUSTRIAL LAW - Underpayment of wages - non payment for annual leave - failure to keep records - unauthorised deductions - penalties - factors relevant - discounting - corporation - liability of sole director and shareholder.

Fair Work Act 2009(Cth), ss.535, 539, 545(1), 546, 550, 557(1)

Fair Work Regulations 2009 (Cth), regs.3.32, 3.34

Workplace Relations Act 1996 subs.182(1)

Fitness Industry Award 2010 Schedule D subclause D.5.2

Cousins v Merringtons Pty Ltd & Anor (No 2) [2008] VSC 340

CPSU v Telstra Corporation [2001] FCA 1364; (2001) 108 IR 228

Fair Work Ombudsman v Cleaners New South Wales Pty Ltd [2009] FMCA 683

Fair Work Ombudsman v Contracting Plus Pty Ltd & Anor [2011] FMCA 191

Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408

Fair Work Ombudsman v Stewarts Transport & Logistics Pty Ltd & Ors [2010] FMCA 905

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70

Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357

Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543

(1) The first respondent contravened:

• (a) subsection 182(1) of the Workplace Relations Act 1996 (the "WRA"), by failing, during the period 1 July 2009 to 31 December 2009, to pay the required minimum basic period rate of pay to:

  • (i) Adam Broekate (Broekate);
  • (ii) Julian Gentil (Gentil);
  • (iii) Brendan Giddings (Giddings);
  • (iv) Nickala Knowles (N Knowles)
  • (v) Zachariah Knowles (Z Knowles)
  • (vi) David Sanders (Sanders); and
  • (vii) Beau Summers (Summers).

• (b) section 45 of the Fair Work Act 2009 (the "FWA"), by contravening subclause D.5.2 of Schedule D to the Fitness Industry Award 2010 (the "Fitness Award") by failing, during the period 1 January 2010 until the termination of each employee's employment to pay the required minimum rate of pay under the Fitness Award to:

  • (i) Lucy Brown (Brown);
  • (ii) Andrew Cass (Cass);
  • (iii) Emily Fowles (Fowles);
  • (iv) Gentil;
  • (v) Liam Nolan (Nolan);
  • (vi) Jamie Sherer (Sherer); and
  • (vii) Summers.

• (c) section 45 of the FWA by contravening subclause 17.1 of the Fitness Award by failing to pay the required minimum rate of pay to Kellye Barton (Barton) and Harmony Mott (Mott);

• (d) section 45 of the FWA by contravening subclauses 13.2 and 13.3 of the Fitness Award by failing to pay the required casual loading to Barton and Mott;

• (e) subsection 323(1) of the FWA by making deductions from the wages of the following employees without authorisation:

  • (i) Broekate;
  • (ii) Brown;
  • (iii) Cass;
  • (iv) Fowles;
  • (v) Gentil;
  • (vi) Giddings;
  • (vii) N Knowles;
  • (viii) Z Knowles;
  • (ix) Nolan;
  • (x) Sanders;
  • (xi) Sherer; and
  • (xii) Summers.

• (f) subsection 232(2) of the WRA by failing during the period 1 July 2009 to 31 December 2009 to provide an entitlement to accrue annual leave to:

  • (i) Broekate;
  • (ii) Fowles;
  • (iii) Gentil;
  • (iv) Giddings;
  • (v) N Knowles;
  • (vi) Z Knowles;
  • (vii) Sanders;
  • (viii) Sherer; and
  • (ix) Summers;

• (g) subsection 235(2) of the WRA by failing to pay accrued, untaken annual leave upon termination of employment to:

  • (i) Broekate;
  • (ii) Giddings;
  • (iii) N Knowles;
  • (iv) Z Knowles;
  • (v) Sanders;
  • (vi) Caitlin Priano (Priano)
  • (vii) Carmen Taylor (Taylor); and
  • (viii) Melissa Urbano (Urbano);

• (h) subsection 44(1) of the FWA by contravening subsection 87(2) of the FWA by failing, during the period 1 January 2010 until the termination of each employee's employment to provide an entitlement to accrue annual leave to:

  • (i) Brown;
  • (ii) Cass;
  • (iii) Fowles;
  • (iv) Gentil;
  • (v) Sherer; and
  • (vi) Summers;

• (i) subsection 44(1) of the FWA by contravening subsection 90(2) of the FWA by failing to pay accrued, untaken annual leave upon termination of employment to:

  • (i) Brown;
  • (ii) Cass;
  • (iii) Fowles;
  • (iv) Gentil;
  • (v) Nolan;
  • (vi) Sherer; and
  • (vii) Summers;

• (j) subsection 535(1) of the FWA by failing at all relevant times to comply with Item 3.36(1)(b) and Item 3.40 of the Fair Work Regulations 2009 (the "FW Regulations") in respect of records the first respondent was required to make and keep; and

• (k) Item 3.44 of the FW Regulations by failing at all relevant times to ensure that records it was required to make and keep were not false or misleading to its knowledge.

(2) The second respondent was involved, within the meaning of s.550(1) of the FWA, in each of the contraventions by the first respondent set out in order 1 and is therefore taken to have contravened the WRA, the FWA and the FW Regulations in the same manner.

(3) The first respondent pay $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.

(4) The second respondent pay $7,656.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.

(5) Should Revolution Martial Arts Pty Ltd not pay the aggregate penalty of $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days from the date hereof, David Michael Auty becomes liable to pay the penalty of $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within those 30 days, in addition to the penalty imposed on him.

1. This is an application by the Fair Work Ombudsman (the "FWO") for the imposition of penalties on Revolution Martial Arts Pty Ltd ("RMA") and David Michael Auty ("Mr Auty") who was at the relevant time the secretary, sole shareholder and director of RMA (Agreed Statement of Facts ("ASOF") [15]). The matter involves breaches of various industrial instruments concerning 18 employees of RMA.
2. The hearing took place on 14 December 2012, but was not completed. As a result, the following orders were made:
   • (1) The respondents file and serve written submissions in relation to the media release issue on or before 16 January 2013.
   • (2) The applicant file and serve written submissions on or before 1 February 2013 in response to:
     • (a) Issues raised in the oral submissions of Counsel for the respondents on 14 December 2012; and
     • (b) Any written submissions filed by the respondents in relation to the media release issue.

1. An ASOF was filed on 23 October 2012. As a result, the issues for determination by the Court are:

1. How many groups the breaches comprise; 2. What penalties should be imposed on RMA; and

1. What penalties should be imposed on Mr Auty.
2. The employees and RMA were at all relevant times covered by industrial instruments.
3. Throughout the relevant period, RMA made unauthorised deductions from the wages of various employees.
4. As a result of the contraventions by RMA, the employees suffered an aggregate loss of $67,320.46 (Annexure E to the Statement of Claim).
5. RMA did not make and keep accurate records of each employees details and entitlements.
6. It is agreed in the ASOF:
   • That RMA contravened provisions of the Workplace Relations Act 1996 (the "WRA") and the Fair Work Act 2009 (the "FWA") and applicable Regulations;
   • That RMA contravened relevant industrial instruments and legislation;
   • Mr Auty was responsible for the operation of the business of RMA, including determining rates of pay and entitlements, and keeping records (ASOF [102(a), (b), (e) and (t)]);
   • That Mr Auty was aware that RMA was legally obliged to pay its employees certain minimum entitlements (ASOF [102(g)]);
   • That Mr Auty failed to ascertain what was required to make lawful deductions from employees wages (ASOF [102(l)]);
   • That Mr Auty was aware that employees were entitled to accrue annual leave and be paid for accrued, but untaken, annual leave upon termination of employment (ASOF [102(q)]);
   • That Mr Auty was responsible for the making and keeping of records (ASOF [102(t)]); and
   • That Mr Auty was involved in each of the contraventions by RMA within the meaning of s.550 of the FWA (ASOF [103]).

Section 550 of the FWA provides:

(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:

• (a) has aided, abetted, counselled or procured the contravention; or
• (b) has induced the contravention, whether by threats or promises or otherwise; or
• (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
• (d) has conspired with others to effect the contravention.

• On 17 January 2012, a contravention letter was sent by the FWO which required RMA to rectify all identified contraventions, and alleged that Mr Auty was involved in those contraventions (ASOF [152] and [153]).
• Various matters were raised as to the calculation of the underpayments (ASOF [154]-[174]).
• By letter dated 27 June 2012, the respondents proposed a payment plan to pay employees all outstanding amounts by 12 October 2012, but did not make any admissions of liability in respect of the outstanding amounts (ASOF [182]).
• On 13 July 2012 the respondents admitted liability in respect of all contraventions (ASOF [183]).
• By 10 September 2012 RMA had rectified the whole of the underpayments (ASOF [184]). A schedule of the payments is set out in the Affidavit of Megan Carter sworn 5 November 2012 at [6].
• Since around 1 June 2012, RMA has not operated the business. Mr Auty continues to be the secretary, sole shareholder and director of RMA (ASOF [187]-[188]).
• There have been no penalties for contraventions of the FWA or the WRA imposed on RMA or Mr Auty, or a company of which Mr Auty has been a director or shareholder (ASOF [189]).
• On 30 August 2012, the FWO issued a media release (Exhibit R1) naming both respondents (ASOF [190]).

1. Some of the underpayments date back to 2009 (Annexure C to the Statement of Claim).
2. Orders were made in chambers on 24 August 2012, which encapsulated the admissions made by the respondents and set the matter down for a penalty hearing on 14 December 2012. At that hearing, Ms Carter appeared for the applicant and Mr Millar of Counsel for the respondents.
3. The FWO seeks:
   • Declarations of contraventions; and
   • Orders that RMA and Mr Auty pay pecuniary penalties, to be paid into the Consolidated Revenue Fund of the Commonwealth.
4. Section 546 of the FWA provides for the imposition of penalties for contravention of civil remedy provisions [as identified in s.539(1) and (2)].
5. Section 557(1) of the FWA provides:
   • (1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
     • (a) the contraventions are committed by the same person; and
     • (b) the contraventions arose out of a course of conduct by the person.
6. The maximum penalty that may be imposed by the Court for a contravention is:
   • 300 penalty units ($33,000.00) on RMA [s.546(2)(b)], and
   • 60 penalty units ($6,600.00) on Mr Auty [s.546(2)(a) and s.539(2)]; and
   • $11,000.00 and $2,200.00 respectively for a contravention of the Fair Work Regulations 2009 (the "FW Regulations") [reg.4.01A and s.546(2)].
7. The maximum penalties that may be imposed for a breach of s.535 (failure to keep records) are:
   • 150 penalty units ($16,500.00) on RMA; and
   • 30 penalty units ($3,300.00) on Mr Auty.

1. Ms Carter submits that the contraventions fall into six groups relating to:
   • (1) Minimum wages;
   • (2) Casual loading;
   • (3) Annual leave;
   • (4) Making unlawful deductions;
   • (5) The failure to keep records; and
   • (6) The failure to keep accurate records.
2. Mr Millar contends that (1) and (2) should fall into one group, and (5) and (6) into another group, making a total of four groups.
3. The obligation under the FWA on an employer to keep records arises from s.535 which provides:
   • (1) An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.

Note: This subsection is a civil remedy provision (see Part 4-1).

(2) The records must:

• (a) if a form is prescribed by the regulations - be in that form; and
• (b) include any information prescribed by the regulations.

Note: This subsection is a civil remedy provision (see Part 4-1).

(3) The regulations may provide for the inspection of those records.

1. Regulation 3.32 of the FW Regulations provides:

For subsection 535(1) of the Act, a kind of employee record that an employer must make and keep is a record that specifies:

(a) the employer's name; and

(b) the employee's name; and

(c) whether the employee's employment is full-time or part-time; and

(d) whether the employee's employment is permanent, temporary or casual; and

(e) the date on which the employee's employment began; and

(f) on and after 1 January 2010 - the Australian Business Number (if any) of the employer.

Note Subsection 535(1) of the Act is a civil remedy provision. Section 558 of the Act and Division 4 of Part 4-1 deal with infringement notices relating to alleged contraventions of civil remedy provisions.

1. Regulation 3.34 of the FW Regulations provides:

For subsection 535(1) of the Act, if a penalty rate or loading (however described) must be paid for overtime hours actually worked by an employee, a kind of employee record that the employer must make and keep is a record that specifies:

(a) the number of overtime hours worked by the employee during each day; or

(b) when the employee started and ceased working overtime hours.

Note Subsection 535 (1) of the Act is a civil remedy provision. Section 558 of the Act and Division 4 of Part 4-1 deal with infringement notices relating to alleged contraventions of civil remedy provisions.

1. A "failure to keep records" [group (5)] must include:
   • A failure to keep them at all; and
   • A failure to keep accurate records, as if they are not accurate, they are not "records" of what happened; as they do not "set down or register" what happened (definition of "record" - Macquarie Dictionary).
2. The Court finds that the applicant's groups (5) and (6) fall into one group.
3. The Court finds that a failure to pay minimum wages is a similar contravention to the failure to pay casual loadings. The applicant's groups (1) and (2) fall into one group.
4. The Court finds that there are four groups:
   • (1) The failure to pay minimum wages and casual loadings;
   • (2) Contraventions relating to the accrual of annual leave and payments upon termination of employment;
   • (3) Making unlawful deductions from wages; and
   • (4) The failure to keep records.

1. Ms Carter proposes that the penalties imposed on RMA should be between $38,000.00 and $55,000.00; and between $7,700.00 and $10,000.00 on Mr Auty.
2. The maximum penalties that can by imposed on RMA are:
   • $33,000.00 for each of the first three groups ($99,000.00); and
   • $11,000 for the failing to keep records offences.
3. The maximum penalties that can be imposed on Mr Auty are:
   • $6,600.00 for each of the first three groups ($19,800.00); and
   • $2,200 for the failing to keep records offences.
4. Ms Carter submits that it is relevant in assessing penalties to have regard to whether there have been any previous prosecutions of a respondent which should have alerted them to their obligations. The Court accepts that submission.
5. Tracey J adopted the following list of relevant matters when assessing penalties in Kelly v Fitzpatrick (2007) 166 IR 14 at [14]:
   • In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified "a 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". Those considerations were derived from a number of decisions of this Court. I gratefully adopt, as potentially relevant and applicable, the various considerations identified by him. They were:
     • 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.
   • The parties accepted that these considerations should guide the exercise of my discretion in the present proceeding.
6. Ms Carter made the following submissions as to those matters.

The nature and extent of the conduct which led to the breaches

1. The contraventions represent a significant failure by the respondents to comply with fundamental obligations to employees. The contraventions relate to 18 employees from 1 July 2009 until 12 April 2012, and employees were affected for between 3 and 14 months. Ms Carter submits that as the employees were under 21 years old at the time, they were extremely vulnerable.

1. Twelve of the employees were undertaking traineeships with RMA. As a result of an investigation in 2006, Mr Auty was aware of minimum wage obligations and entitlements relating to annual leave, which are aggravating factors as to penalty. It is submitted that the respondents derived a dual benefit from the contraventions being the benefit of the underpayments and deductions and the benefit of the employees providing assistance outside their paid hours of work.

The nature and extent of any loss or damage sustained as a result of the breaches

1. All underpayments have been rectified, but the employees were denied the benefit of their full entitlements as they fell due.

Whether there had been similar previous conduct by the respondent

1. The FWO is not aware of any previous findings of contraventions by RMA or Mr Auty, but investigations for similar breaches in 2006 should have given him knowledge of employee's entitlements. Proceedings were not instituted against him.

Whether the breaches were properly distinct or arose out of the one course of conduct

1. The FWO submits that there are six groups of contraventions. The Court has found that there are four groups.

1. Neither the FWO nor Mr Auty have submitted details of the financial circumstances of the business, and the FWO submits that there is no evidence that RMA was a large business. The FWO submits that Mr Auty did not have the assistance of a human resources advisor.

1. The FWO submits that the conduct of RMA was deliberate in that it had knowledge of its obligations. Reference is made to the ASOF at [102] and [111]. The Court finds that those paragraphs show some knowledge by Mr Auty and therefore RMA.

Whether senior management was involved in the breaches

1. The Court finds that Mr Auty, as company secretary, was the senior manager of RMA and was directly involved in all of the breaches.

Whether the party committing the breach had exhibited contrition

1. The respondents admitted the contraventions one month after proceedings were commenced. Their admissions have contributed significantly to the payment of outstanding entitlements and the avoidance of a hearing as to liability, which has reduced the cost of the proceedings. There is no allegation that the respondents do not regret the contraventions.

The Court finds that the respondents are entitled to contest the groupings and the level of penalties.

Whether the party committing the breach had taken corrective action

1. The FWO accepts that RMA has rectified the whole of the identified underpayments, but has recovered $50,660.00 for martial arts training, provided by RMA to the employees/trainees. The Court finds that the recovery does not mean that corrective action has not been taken.

Whether the party committing the breach had cooperated with the enforcement authorities

1. The FWO submits that the respondents cooperated with the FWO in interviews, in the provision of documents, in rectifying underpayments and in agreeing to the ASOF.

1. The FWO submits:
   • ...where wrong-doers have co-operated with the regulatory authority and have made admissions early in the course of an investigation or soon after the commencement of proceedings, it is appropriate to allow a discount on the maximum applicable penalties. However, consistent with the decision in Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 (at 74-76 per Stone and Buchanan JJ):
     • ...the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability:
     • (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or
     • (b) has indicated a willingness to facilitate the course of justice.
   • The Applicant (FWO) also refers to the statements of Federal Magistrate Burnett in Fair Work Ombudsman v Contracting Plus Pty Ltd v (sic "&") Anor [2011] FMCA 191 at 125-127:
     • Although the applicant concedes that the respondents have admitted liability and could be said to have cooperated by partaking in the investigation, at least in a limited fashion; particularly by engaging in the record of interview process; by providing some necessary records and, by signing the agreed statement of facts, although that itself was only agreed on the day of trial and, of course, only after some delay, the applicant says that the Court should not be too anxious to afford the respondent a significant discount for its admission and conduct.
     • In considering whether or not a discount should be applied, I have regard to the observations of Branston J in Mornington Inn Pty Ltd v Jordan,[1] where her Honour said:
       • The rationale for providing a discount for early plea of guilty in a criminal case does not apply neatly to a case such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather the benefit of such a discount should be reserved for cases where it can fairly be said an admission of liability (a) has indicated an acceptance of wrongdoing and suitable and credible expression of regret and/or (b) has indicated a willingness to facilitate the course of justice.
     • In my view, this is a case where neither of those qualities can be demonstrated and, accordingly, I do not consider that any discount ought to be provided in this instance on this basis.
   • The Applicant (FWO) submits that it is appropriate that a discount in penalty be awarded as a result of the Respondents' admissions of liability and general level of co-operation with the Applicant, including entering into the ASOF. However, the Respondents did not make admissions at the earliest possible opportunity and, to the Applicant's knowledge, have not apologised to the Employees.
   • In the circumstances, the Applicant (FWO) submits that an appropriate discount to afford the Respondents would be a 20% discount to the maximum penalty (for admissions and rectification: see Transcript 'T" p.9, l.34). On this basis, the effective maximum penalties would be as follows:
     • (a) in respect of the First Respondent:
       • (i) $26,400 in respect of the Minimum Wage Contraventions;
       • (ii) $26,400 in respect of the Annual Leave Contraventions;
       • (iii) $26,400 in respect of the Casual Loading Contravention;
       • (iv) $26,400 in respect of the Deduction Contravention;
       • (v) $13,200 in respect of the Record Keeping Contravention; and
       • (vi) $8,800 in respect of the Accuracy of Records Contravention,

with an aggregate maximum penalty of $127,600; and

(b) In respect of the Second Respondent:

• (i) $5,280 in respect of the Minimum Wage Contraventions;
• (ii) $5,280 in respect of the Annual Leave Contraventions;
• (iii) $5,280 in respect of the Casual Loading Contravention;
• (iv) $5,280 in respect of the Deduction Contravention;
• (v) $2,640 in respect of the Record Keeping Contravention; and
• (vi) $1,760 in respect of the Accuracy of Records Contravention,

with an aggregate maximum penalty of $25,520.

1. Having found that there were in fact four groups of breaches, the Court recalculates those figures:
   1. In respect of RMA:
      1. $26,400.00 for the minimum wages and casual loading breaches;
      2. $26,400.00 for the annual leave breaches;
      3. $26,400.00 for the unlawful deductions; and
      4. $13,200.00 for failing to keep records.

1. In respect of Mr Auty:
   1. $5,280.00 for the minimum wage and casual loading breaches;
   2. $5,280.00 for the annual leave breaches;
   3. $5,280.00 for the unlawful deductions; and
   4. $2,640.00 for failing to keep records.

The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements

1. The FWO submits that the penalties imposed should reflect the intention of Parliament to protect employees' entitlements. The Court accepts that significant penalties are specified; here the breaches are serious; the employees were young and vulnerable.

1. The FWO refers to the decision of Gray J in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357 at [37] that:
   • Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.

1. The FWO submits that:
   • The role of general deterrence in determining the appropriate penalty is illustrated by the comments of Lander J in Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543, [93]
     • In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.
   • Similarly, Finkelstein J said in CPSU v Telstra Corporation [2001] FCA 1364; (2001) 108 IR 228 at 231 that:
     • even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct.
   • The Applicant (FWO) submits that general deterrence will always be a significant factor in determining an appropriate penalty for contraventions of the WR Act and the FW Act. The circumstances where specific deterrence will not form part of the exercise of the Court's discretion will be rare.

1. The Court accepts the submissions for the FWO that the Court should not have regard to legal costs incurred by a respondent in defending proceedings of this nature. To do otherwise, would be to accept that persons should not have to bear the legal costs of defending against prosecutions for breaches of the law.
2. The FWO submits that once the Court sets penalties, it should take a final look at the aggregate penalty on a party to determine if it is an appropriate response to the conduct which led to the contraventions.

1. The Court finds that the FWO issued a media release on 30 August 2012 (see Exhibit R1) and should have shown greater restraint in the wording of the media release which was calculated to allow identification of the respondents and for them to be subject to public derision and contempt. Mr Millar referred to the judgment of Hansen J in Cousins v Merringtons Pty Ltd & Anor (No 2) [2008] VSC 340 that where a media release is issued:
   • ... before the trial "appropriate restraint in tone and content is required" to avoid the defendants suffering damage that would not have occurred had the media release been fair and accurate.
2. The Court finds that it was not necessary for the media release to state the address of RMA or of Mr Auty; that allowed identification of the respondents and for them to be subject to public derision and contempt.
3. The Court has regard to the decision in Fair Work Ombudsman v Cleaners New South Wales Pty Ltd [2009] FMCA 683 at [25] that embarrassment from publicity is a penalty in itself. The Court has regard to this in assessing the aggregate penalties to be imposed. In Fair Work Ombudsman v Stewarts Transport & Logistics Pty Ltd & Ors [2010] FMCA 905 at [82] it was accepted that media attention is "no doubt embarrassing". Ms Carter accepts that some embarrassment may be taken into account in setting penalty (T p.43, l.19).

1. The FWO submits that the appropriate penalty on RMA for the minimum wage and casual loading breach is 30-40% of the maximum after discounting by 20%. This would be between $7,920.00 and $10,560.00. A 40% discount after the initial discount of 20% would result in an overall discount to 48% (100 less 20% = 80 less 40% = 48%).
2. The FWO submits that the appropriate penalty on RMA for the annual leave breaches is 40-50% of the maximum after discounting by 20%. This would be between $10,560.00 and $13,200.00.
3. The FWO submits that the appropriate penalty on RMA for the unlawful deductions is between 30-40% after discounting by 20%. This would be between $7,920.00 and $10,560.00.
4. The FWO submits that the appropriate penalty on RMA for the failure to keep records is 20-30% after discounting by 20%. This would be between $2,640.00 and $3,960.00.
5. The aggregate for the groups would be between $29,040.00 and $38,280.00.
6. The Court finds the higher aggregate figure to be the appropriate penalty for the conduct involved
7. The Court orders that RMA pay a penalty of $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.

1. Mr Auty is entitled to the same discount as RMA. The Court imposes a penalty of $7,656.00 on Mr Auty.
2. The Court orders that Mr Auty pay a penalty of $7,656.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.
3. The Court has a discretion as to whether a penalty should be imposed consequent upon finding a breach. Section 545(1) of the FWA provides:
   • (1) The Federal Court or the Federal Magistrates Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Note 1: For the court's power to make pecuniary penalty orders, see section 546.

Note 2: For limitations on orders in relation to costs, see section 570.

Note 3: The Federal Court and the Federal Magistrates Court may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).

Note 4: There are limitations on orders that can be made in relation to contraventions of subsection 65(5), 76(4), 463(1) or 463(2) (which deal with reasonable business grounds and protected action ballot orders) (see subsections 44(2), 463(3) and 745(2)).

1. Section 546 of the FWA provides:
   • (1) The Federal Court, the Federal Magistrates Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).

1. It is submitted for Mr Auty that to impose a penalty on him may result in him incurring the cost twice for each contravention.
2. The FWO submits that the key purpose of s.550 of the FWA is to permit an accessory to a party's contravention to be treated as having committed the contravention themselves. The Court accepts that, but the power to impose a penalty remains discretionary. The Court must exercise that discretion in accordance with the legislation and case law on the matter.
3. The FWO relied on the decision in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 at [8] where Buchanan J rejected the proposition that:
   • either or both respondents (being a corporation and a director with a controlling interest) might have the benefit of any reduction in penalty because they were jointly, as well as individually, culpable.
4. The Court finds that Mr Auty cannot avoid liability on the basis that RMA has had penalties imposed on it.
5. The Court makes the following declarations.
   • (1) The first respondent contravened:

(a) subsection 182(1) of the WRA by failing, during the period 1 July 2009 to 31 December 2009, to pay the required minimum basic periodic rate of pay to:

(i) Adam Broekate (Broekate);

(ii) Julian Gentil (Gentil);

(iii) Brendan Giddings (Giddings);

(iv) Nickala Knowles (N Knowles)

(v) Zachariah Knowles (Z Knowles)

(vi) David Sanders (Sanders); and

(vii) Beau Summers (Summers).

(b) section 45 of the FWA by contravening subclause D.5.2 of Schedule D to the Fitness Industry Award 2010 (the "Fitness Award") by failing, during the period 1 January 2010 until the termination of each employee's employment to pay the required minimum rate of pay under the Fitness Award to:

(viii) Lucy Brown (Brown);

(ix) Andrew Cass (Cass);

(x) Emily Fowles (Fowles);

(xi) Gentil;

(xii) Liam Nolan (Nolan);

(xiii) Jamie Sherer (Sherer); and

(xiv) Summers.

(c) section 45 of the FWA by contravening subclause 17.1 of the Fitness Award by failing to pay the required minimum rate of pay to Kellye Barton (Barton) and Harmony Mott (Mott);

(d) Section 45 of the FWA by contravening subclauses 13.2 and 13.3 of the Fitness Award by failing to pay the required casual loading to Barton and Mott;

(e) subsection 323(1) of the FWA by making deductions from the wages of the following employees without authorisation:

(xv) Broekate;

(xvi) Brown;

(xvii) Cass;

(xviii) Fowles;

(xix) Gentil;

(xx) Giddings;

(xxi) N Knowles;

(xxii) Z Knowles;

(xxiii) Nolan;

(xxiv) Sanders;

(xxv) Sherer; and

(xxvi) Summers.

(f) subsection 232(2) of the WRA by failing, during the period 1 July 2009 to 31 December 2009, to provide an entitlement to accrue annual leave to:

(xxvii) Broekate;

(xxviii) Fowles;

(xxix) Gentil;

(xxx) Giddings;

(xxxi) N Knowles;

(xxxii) Z Knowles;

(xxxiii) Sanders;

(xxxiv) Sherer; and

(xxxv) Summers;

(g) Subsection 235(2) of the WRA by failing to pay accrued, untaken annual leave upon termination of employment to:

(xxxvi) Broekate;

(xxxvii) Giddings;

(xxxviii) N Knowles;

(xxxix) Z Knowles;

(xl) Sanders;

(xli) Caitlin Priano (Priano)

(xlii) Carmen Taylor (Taylor); and

(xliii) Melissa Urbano (Urbano);

(h) Subsection 44(1) of the FWA by contravening subsection 87(2) of the FWA by failing, during the period 1 January 2010 until the termination of each employee's employment to provide an entitlement to accrue annual leave to:

(xliv) Brown;

(xlv) Cass;

(xlvi) Fowles;

(xlvii) Gentil;

(xlviii) Sherer; and

(xlix) Summers;

(i) subsection 44(1) of the FWA by contravening subsection 90(2) of the FWA by failing to pay accrued, untaken annual leave upon termination of employment to:

(l) Brown;

(li) Cass;

(lii) Fowles;

(liii) Gentil;

(liv) Nolan;

(lv) Sherer; and

(lvi) Summers;

(j) subsection 535(1) of the FWA by failing at all relevant times to comply with Item 3.36(1)(b) and Item 3.40 of the Fair Work Regulations 2009 (the "FW Regulations") in respect of records the first respondent was required to make and keep; and

(k) Item 3.44 of the FW Regulations by failing at all relevant times to ensure that records it was required to make and keep were not false or misleading to its knowledge.

(2) The second respondent was involved, within the meaning of s.550(1) of the FWA, in each of the contraventions by the first respondent set out in order 1 and is therefore taken to have contravened the WRA, the FWA and the FW Regulations in the same manner.

1. The Court orders that the first respondent pay $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.
2. The Court orders that the second respondent pay $7,656.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days.
3. Should Revolution Martial Arts Pty Ltd not pay the aggregate penalty of $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within 30 days from the date hereof, David Michael Auty becomes liable to pay the penalty of $38,280.00 into the Consolidated Revenue Fund of the Commonwealth within those 30 days, in addition to the penalty imposed on him

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of F. Turner FM

[1] [2008] FCAFC 70; (2008) 168 FCR 383.