Milardovic v Vemco Services Pty Ltd

Date of hearing: 6 to 9 October 2015

National Practice Area: Employment and Industrial Relations

Solicitor for the Respondents: Gary Rothville and Associates

AND: VEMCO SERVICES PTY LTD ACN 83 377 173 (ADMINISTRATORS APPOINTED) First Respondent

JUDGE: MORTIMER J DATE OF ORDER: 16 March 2016

1. The first respondent pay to the applicant the sum of $30,024.60, comprising: (a) $26,250.00 for the applicant's redundancy pay; and (b) $3,774.60 for pre-judgment interest upon the applicant's redundancy pay.
2. There be a stay of 30 days upon the order in paragraph 1.
3. In respect of the contravention of s 44(1) of the Fair Work Act 2009 (Cth) by failing to pay the applicant redundancy pay under s 119(1) of the Act, the first respondent pay a penalty of $10,000.
4. The penalty payable by reason of paragraph 3 be payable to the applicant on or before 15 April 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MORTIMER J: 1 On 29 January 2016, the Court declared that the first respondent had contravened s 44(1) of the Fair Work Act 2009 (Cth) by failing to pay the applicant redundancy pay under s 119(1) of the Act. Consequential orders were made directing the parties to file an agreed proposed order as to the redundancy pay to which the applicant is entitled under s 119(1) of the Act, and making provision for submissions to be filed on the questions of penalties and costs. 2 The parties have complied with those orders and as a result there is a figure which has been agreed as payable to the applicant in relation to the contravention of s 119(1). The parties submitted there should be a stay of 30 days on the order, and I have granted that stay. 3 These reasons should be read in conjunction with my principal reasons for judgment: Milardovic v Vemco Services Pty Ltd (Administrators Appointed) [2016] FCA 19. 4 The submissions of the first respondent (Vemco) sought to draw to the Court's attention a number of matters relating to the consequences of Vemco being placed in administration on 25 October 2015. Insofar as those matters constitute legal submissions, I have taken them into account. Insofar as those matters purport to draw the Court's attention to facts, no admissible evidence has been filed and no leave has been sought to file any such evidence. Accordingly, any new matters of fact are not before the Court. I turn to deal with the issues surrounding the status of Vemco as under administration.

The effect of Vemco being under administration 5 At paragraph 10 of its submissions on penalty and costs, Vemco submits (in substance) that in imposing any penalty the Court should take into account that the penalty is unlikely to be provable as a debt in the liquidation of the company; and that even if the penalty were provable, it is unlikely that the company will have sufficient assets to pay unsecured creditors, meaning the penalty would not be paid to the applicant. 6 Since both these submissions are capable of affecting the Courts approach to the imposition of penalty, I consider them first. The applicant's submissions did not address Vemco's contentions on these issues.

Relevance of whether the penalty will be provable 7 In support of its submissions, Vemco relies on s 553B of the Corporations Act 2001 (Cth), which provides: Insolvent companies - penalties and fines not generally provable (1) Subject to subsection (2), penalties or fines imposed by a court in respect of an offence against a law are not admissible to proof against an insolvent company. (2) An amount payable under a pecuniary penalty order, or an interstate pecuniary penalty order, within the meaning of the Proceeds of Crime Act 1987, is admissible to proof against an insolvent company. [My emphasis.] 8 "Penalty", "fine" and "debt" are not defined terms in the Corporations Act. 9 The short answer to Vemco's submissions is that Vemco is not, at the time of making these orders and on the evidence before the Court, an "insolvent company". In Commonwealth v Leahy Petroleum - Retail Pty Ltd (subject to deed of company arrangement) [2005] FCA 1422; 55 ACSR 353, Finkelstein J said at [5] that "s 553B, which is found in a group of provisions concerned with the proof and ranking of claims in a winding up, cannot be imported into Pt 5.3A, being the Part that deals with administrations." Another issue is whether a penalty would be provable because, by s 549 of the Fair Work Act, a contravention of a civil remedy provision is "not an offence". It may be arguable that the terms s 549 render s 553B inapplicable, although the authorities concerning the construction of "offence" in s 549 suggest it refers to a criminal offence: see Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25; 230 FCR 298 at [62]; Murrihy v Betezy.com.au Pty Ltd (No 2) [2013] FCA 1146; 221 FCR 118 at [7] (Jessup J); Construction, Forestry, Mining and Energy Union v Victoria (No 2) [2013] FCA 1034 at [72] (Bromberg J); cf Mathers v Commonwealth [2004] FCA 217; 134 FCR 135, in which Heerey J held at [29] that "offence against a law" in s 553B(1) extends to contraventions civil penalty provisions of the Trade Practices Act 1974 (Cth). 10 Further, in Leahy Petroleum at [16], Finkelstein J also said that if all provable claims are "paid in full and, for one reason or another, there is still a surplus, the company is no longer 'an insolvent company' and the surplus is to be applied in discharge of the fines and penalties." There is no evidence before the Court whether or not this is likely to occur in Vemco's case. The evidence before the Court is that Vemco remains under administration. It is not an "insolvent company" for the purposes of s 553B and that provision is not applicable to it. 11 If this were not the case, I would have needed to consider the effect of the terms of s 546(4) of the Fair Work Act, which provides that a "pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable". There are no authorities dealing with whether a provision in these terms has the effect that, where a court imposes a penalty that by statute is made recoverable as a debt, such a debt may be provable despite s 553B. There are some equivalent, but not identical provisions to s 546(4) in s 79A(1)(d) of the Competition and Consumer Act 2010 (Cth) and s 1317G(2) of the Corporations Act, but there do not appear to be any authorities on the question. If, as Finkelstein J observed in Leahy Petroleum at [17], the purpose of s 553B is "to prevent the burden of the penalty falling upon creditors", it would seem inconsistent with such a purpose to construe any provision such as s 1317G(2) of the Corporations Act, or s 546(4) of the Fair Work Act, as converting the character of a penalty into a judgment debt and removing its character as a penalty so that s 553B would not apply. The purpose of s 553B might indeed be substantially frustrated if (as it would seem) a significant number of regulatory schemes with penalty provisions have enforcement provisions such as s 546(4). 12 In summary then, the terms of s 553B are not currently applicable to any penalty imposed by the Court on Vemco. If Vemco is placed in liquidation at some time in the future, then it may well be the case that s 553B will operate to preclude any penalty sum being provable. At the moment, given there is no liquidation, I do not consider this factor should preclude the imposition of a penalty if the Court considers it is otherwise appropriate.

Whether capacity to satisfy any penalty order is a permissible consideration in imposing penalty 13 There are conflicting authorities on this issue, none of which were drawn to the Court's attention by Vemco. On the one hand, there is a series of cases in which it has been clearly said that the fact that a corporation is, or may be placed, in liquidation should not dissuade a court from imposing penalties if they are otherwise appropriate. Generally the authorities refer to the fact that the objects of general deterrence in particular are still served by the imposition of a penalty: see for example Australian Competition and Consumer Commission v The Vales Wine Company Pty Ltd [1996] FCA 1798 at [6]; Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2003] FCA 336; ATPR 41-937 at [59]. 14 There is a decision of the Full Court to the same effect in Australian Competition and Consumer Commission v High Adventure Pty Ltd [2005] FCAFC 247; ATPR 42-091, which dealt with a contravention s 48 of the Trade Practices Act. The Full Court noted at [9] that the primary judge had indicated "he had no intention of 'impos[ing] penalties that would ruin the respondents' [and Mr Scott's] family'". The Full Court rejected that approach, stating at [10]-[11]: There are several observations that can be made about the judge's approach. The first (which in the circumstances is probably the least significant) concerns his view that imposing an appropriate penalty would ruin the respondents. We have examined the financial statements that were before the judge. They do not indicate that High Adventure would be forced into liquidation even were a penalty of $40,000 or thereabouts imposed, provided the company was given time to pay. The second observation is that by focusing on the detriment to the respondents the judge ignored both the seriousness of the contravention as well as the need to fix upon an appropriate penalty by reference to the need to deter future contraventions. As the cases to which the judge was referred show, the principal, if not the sole, purpose for the imposition of penalties for a contravention of the antitrust provisions in Part IV is deterrence, both specific and general. This rule is so well entrenched that citation of authority is unnecessary. Moreover, as deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined. 15 A similar approach has been taken outside the context of the Trade Practices Act in Australian Communications and Media Authority v Clarity1 Pty Ltd [2006] FCA 1399; 155 FCR 377 at [41], in which the Court imposed a $4.5 million penalty on a company for contraventions of the Spam Act 2003 (Cth). It was also applied in the context of superannuation contraventions in Olesen v Eddy [2011] FCA 13; 81 ATR 763 at [34] as support for the proposition that a penalty may be made payable in instalments in circumstances of financial hardship. There does not appear to have been any consideration of the question in the context of the Fair Work Act. 16 That said, there are also authorities which suggest that the financial circumstances of a corporation (including the prospect of it going into liquidation) is a matter the Court can take into account in deciding whether to impose a penalty. That approach was taken by Sackville J in Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2; 127 FCR 170 at [8], although his Honour's concerns (the "cost of deterrence being passed onto or borne by others who are not culpable, notably creditors and innocent employees of the company") may have been addressed by the terms and effect of s 553B of the Corporations Act. In Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665, Kiefel J found (at [117]) that imposing a penalty would be "meaningless where a company is being wound up". Her Honour continued: The only purpose it could have is that of deterrence and that is provided by my finding of what orders would have been made were the companies likely to have continued in existence. 17 On appeal (Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) [2007] FCAFC 146; 161 FCR 513 at [16]-[21]), it was conceded on behalf of the ACCC that whether a corporation was in liquidation was a matter a court could take into account. The ACCC's submission was that the fact of liquidation did not necessarily mean no penalty should be imposed, because the imposition of a penalty was nevertheless capable of having a deterrent effect. The Full Court appeared to accept this proposition, finding that Kiefel J had not relied solely on the fact of the company's liquidation in refusing to impose a penalty. 18 In the approach they took, neither Keifel J nor the Full Court referred to High Adventure, although the Full Court did so later in its reasons in relation to other matters. 19 Reconciling these authorities, it is a matter for the court's discretion how to take into account the fact (if it be proven) that a corporation is, or may be placed, in liquidation in determining whether to impose a penalty for contraventions that the court has found proven. There is no authority to the effect that a penalty cannot be imposed. The critical issue is whether in a given case the court is satisfied the imposition of a penalty is still capable of having deterrent effect, whether specific or general. 20 In the present case, Vemco is not in liquidation although it is clear there is a prospect that may occur. I take that into account, but in my opinion it remains appropriate to impose a penalty for reasons of both specific and general deterrence, although principally the latter. I turn to explain why this is so.

Whether a penalty should be imposed and, if so, in what amount 21 As I noted at [53] of the principal judgment, the maximum applicable penalty for a breach of s 119, read with s 44(1) is, relevantly, $51,000 in respect of Vemco. 22 In summary, based on the reasons for judgment in the principal judgment at [282] and [287], the applicant submitted Vemco knew of the applicant's redundancy on and from 30 May 2014 and at the very latest in August 2014. Notwithstanding this, no redundancy payment was made and Vemco maintained through its solicitors there was no entitlement to any such payment. This conduct should be characterised as deliberate. 23 Vemco submits that any penalty imposed for a contravention of s 119(1) should be imposed on the basis that there has been a single contravention of the Fair Work Act, and that in this case the nature and seriousness of the contravention warrants the imposition of a minimal penalty at the lower end of the available range. Vemco submits its conduct was not deliberate but could be described as "an error of understanding" and that it has had no previous contraventions of the Fair Work Act. Vemco relies on the fact it has been placed in administration as meaning that there is little or no utility in specific deterrence. 24 Vemco also made a number of submissions about the likely outcome of its administration, and the applicant's status as a creditor should Vemco be placed into liquidation. I have taken into account the fact Vemco is under administration. I have no evidence of what might occur although as I have said, one possibility is that it may be placed in liquidation. Those are not matters about which the Court should speculate, particularly in the absence of admissible evidence. 25 I summarised the approach I consider should be taken to the determination of appropriate penalties for contraventions of the Fair Work Act in Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338 at [73]-[88] and I adopt the same approach in this proceeding, subject to one matter to which I refer at [40]-[45] below. 26 Both parties referred the Court to the factors set out by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [14], although it was recognised by his Honour, as it has been in other matters, that care needs to be taken so that no 'inflexible checklist' approach develops: see the observations of Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [91], which I would respectfully adopt. 27 The contravention occurred in the context of long running difficulties in relation to the applicant's ongoing employment, including as to the conditions under which he was expected to work, the security of the position he occupied, and the attitude of Mr Barry towards him. The difficulties began not long after the applicant commenced in his bid manager position in November 2012 and continued until he went on sick leave in May 2014. The working relationship he had with Mr Barry and his co-workers was, as I found in the principal judgment, fraught. In late 2013 and early 2014, Vemco deliberately decided to restructure the bid management and tender aspects of its business. Conscious choices were made about this structure, which involved the applicant's position being removed from the business structure and replaced with two distinct positions. This was announced generally by Mr Barry in January 2014 at a meeting of all relevant staff. As I found at [185] of the principal judgment, Mr Barry's evidence was that reporting lines changed in about March 2014. 28 This was no accidental or unplanned decision. Mr Milardovic was clearly told by Mr Barry and Ms Finnigan that he would be "made redundant" if he did not apply for either of the new positions, or if he applied and was unsuccessful in being appointed to either of them. In early April 2014 Vemco was proceeding on the basis that "[e]ffectively [the applicant's] current role does not exist going forward and he is welcome to apply for either or both of the newly created roles": see principal judgment at [186]. At [193] I set out Ms Finnigan's evidence of what the applicant was told at a meeting on 7 May 2014: And should he not take up either role, then the option was redundancy. 29 There are similar findings about Vemco's clear intention that the applicant's position be redundant at [278]. At [209], based on Mr Barry's evidence, I found the two new roles were filled in July or August 2014. At [279]-[280] I refer to the gaps in the evidence, and the lack of evidence, about why Vemco did not terminate the applicant's employment before November 2014. 30 For the purposes of penalty, I do not consider that those evidentiary gaps assist Vemco. They do not lead me to characterise its conduct as based on some kind of "error of understanding". It well knew and understood that the applicant's position was to become redundant, indeed that was the very proposal in January 2014, which was acted on and implemented in the first half of 2014. 31 In my opinion, Vemco should have made a redundancy payment to the applicant well before November 2014, when it was clear he had not applied for either of the two positions and indeed they had been filled by two new appointments by August 2014. At the very least, a redundancy payment should have been made to the applicant on termination of his employment in November 2014. However, in my opinion Vemco knew by May 2014 that Mr Milardovic's position was in fact redundant, and by July or August when it appointed two people to the new positions, it should have understood it was obliged to pay Mr Milardovic a redundancy entitlement. 32 It is difficult to separate out the damage caused to Mr Milardovic by this contravention as opposed to the other behaviour engaged in by Mr Barry as agent for or on behalf of Vemco. As I found in the principal judgment at [77], Mr Barry was the main actor in all of Vemco's decisions and its conduct in respect of Mr Milardovic. His personal attitude to Mr Milardovic also caused a great deal of distress to Mr Milardovic, although I found he was not involved in any adverse action against Mr Milardovic. Had Mr Milardovic been treated as he should have been in relation to redundancy, I am satisfied his distress and confusion would have been considerably lessened because he would at least have clearly understood what the position was regarding his employment. He was given no such clarity. 33 I accept Vemco's submission that the contravention is properly seen as one course of conduct. The applicant did not dispute this characterisation. Therefore one penalty is appropriate. I accept also that this is Vemco's first contravention of the Fair Work Act. 34 Vemco ran a sizeable business in the preparation and conduct of bid management and tender projects. The only evidence about the size of the business was that across the whole group of companies (of which Vemco was a part) there were 400-500 employees. However the general tenor of Mr Barry's evidence was that Vemco was a significant player in the bid management industry, and that is also apparent from the evidence given about the size and nature of the bids in which Mr Milardovic was involved. It was certainly a sizeable enough company to have in place proper systems for advice about its legal obligations to its employees, and for its human resources personnel (such as Ms Finnigan) to understand what those obligations were and how they needed to be acted upon. In contrast, the evidence leaves me with the impression that aspects of Vemco's obligations to its employees were handled poorly, informally and haphazardly. It seems to me Mr Barry bears some responsibility for this, and a good example of poor handling was the evidence (and the findings I made) about the incomplete, unfair and generally poor management of Mr Milardovic's performance review process. 35 Since Vemco is under administration there is no evidence of any corrective action taken by the company, nor is any likely to be taken. I have no evidence about the reasons it was placed under administration and cannot draw any inferences whether the kind of poor management which was plain in the evidence before me featured in those reasons. 36 Ensuring employees are paid appropriate redundancy entitlements is a critical element of securing to employees their lawful employment entitlements. The restructure by corporations of their business operations to suit changing needs and requirements is a fundamental aspect of most employment situations. Employers must be astute to ensure that employees' entitlements in such circumstances are not overlooked, nor given less priority than they should be. Here, Vemco looked to its own business needs without any particular attention being given to Mr Milardovic's interests, including his right to be told, clearly and at an appropriate time, what had happened to his position at Vemco. As I found at [188] and [253], Vemco (through Mr Barry) pursued its restructure without keeping Mr Milardovic clearly informed in relation to the consequences for his position. 37 This is a circumstance which calls for some meaningful general deterrence. I accept the question of specific deterrence for Vemco is less clear. However, those individuals who have been the principal actors on behalf of Vemco can and should also learn from these experiences. A corporation acts through natural persons who guide, control and determine conduct taken on behalf of a corporation: see, in a different context, Fencott v Muller [1983] HCA 12; 152 CLR 570 at 583 (Gibbs CJ), 588-9 (Mason, Murphy, Brennan and Deane JJ), 611 (Wilson J), and 618 (Dawson J). 38 I accept the applicant's submissions that the fact of Vemco's administration on and from October 2015 should not affect my determination of what I otherwise consider to be an appropriate penalty to be imposed for its conduct in 2014. Heerey J took a similar approach in Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd (Administrators Appointed) [2004] FCA 376; ATPR 41-983 at [20]-[25], concluding that the administration of the respondent was not relevant to the determination of an appropriate penalty. I have taken Vemco's status as being under administration into account but for the reasons I have set out I consider that a penalty should nevertheless be imposed. 39 Taking all the circumstances into account, I find an appropriate penalty is $10,000. It is a meaningful and not token sum, which nevertheless reflects the fact that Vemco's conduct is not at the high end of contravening conduct in its nature, quality or duration. 40 Were I free to do so, I would, in the exercise of the Court's discretion under s 546(3), order that the penalty be payable to the Commonwealth rather than to Mr Milardovic. However that course is not open to me following the Full Court's decision in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4. The Full Court's decision requires the Court to make an order that Vemco pay the penalty the Court has imposed on it to Mr Milardovic. 41 That the Full Court's decision in Sayed requires me to make such an order arises from several aspects of the Full Court's reasons. First, at [72] their Honours identified "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". 42 Second, at [101] the Full Court held: Given the legislative history of ss 539(2) and 546(3) of the FW Act, since the enactment of ss 44 and 45 in the pioneering 1904 Act, and the manner in which the "usual order" was articulated in such early cases as the Vehicle Builders' Employees' Federation case and Seymour, which is reflected in the Explanatory Memorandum, we consider that the power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. We accept that there may be cases (of which this is not one) where the penalty, or a part of the penalty, should be paid to another person in the circumstances described by Gray J in Plancor at [44] (as set out at [96] above). [My emphasis.] 43 The reference to Gray J in Plancor is a reference to the following passage of his Honour's reasons in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170; 171 FCR 357 at [44]: The correct view is that the 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 … exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted. 44 Subject then to the "Gibbs exception" (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216 at 223-4), the Full Court's decision in Sayed is authority for the proposition that where a proceeding is brought by an applicant on his or her own behalf, the discretion in s 546(3) is to be exercised to make any penalty the Court orders payable to that applicant. Aside from the identity of the person who brings the proceedings, and taking into account the "Gibbs exception", the Full Court's judgment does not appear to provide for any other basis upon which a penalty should be made payable to another person or entity set out in s 546(3). Plainly, the "Gibbs exception" does not apply to Mr Milardovic's circumstances. 45 Accordingly, I consider I am bound to make an order pursuant to s 546(3) of the Fair Work Act that the penalty I have imposed is payable to the applicant.

Costs 46 Both parties have applied for costs orders pursuant to s 570(2) of the Fair Work Act. The applicant puts his claim on the basis that, based on the Court's findings, Vemco acted unreasonably in not paying Mr Milardovic's redundancy entitlement, and that is sufficient for the application of s 570(2). Both respondents (the proceeding against Mr Barry having been wholly dismissed) rely on an offer of settlement made in writing to Mr Milardovic of $80,000 "gross of taxation", which Mr Milardovic refused. The written offer was made on 18 August 2015, approximately two months before the trial was scheduled to commence. Mr Milardovic rejected that offer. His claim in the proceeding was quantified by him at in excess of $1.5 million, principally on the basis that he would never work again. The respondents submit that his refusal of the settlement offer was an "unreasonable act or omission" which caused the respondents to incur costs, within the meaning of s 570(2)(b) of the Fair Work Act. 47 I do not consider that there should be any orders for costs in this proceeding. As the Full Court noted in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) [2015] FCAFC 166 at [12], the explanatory memorandum for s 570(1) states that the provision "confirms that the FW Act is generally a 'no costs' jurisdiction". Further, while it appears to have been accepted that refusal of a settlement offer could, in an appropriate case, be an "unreasonable act or omission" (see Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394; 205 IR 465 at [23]-[35] (Barker J)), it has also been held that "[t]he discretion conferred on the Court, by s 570(2), must be exercised cautiously and only in a clear case": Tsapatolis v Fuji Xerox Australia Ltd [2015] FCA 514 at [11] (Tracey J), citing Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J). I consider the general rule established by s 570(1) to be appropriate in this case. In any event, s 570(2) confers a residual discretion on the court, even if it is satisfied of any or all of the matters in sub-sections (a)-(c), but in my view the exception in s 570(2)(b) is not enlivened here. 48 The respondents were entitled to defend the proceeding as they did. Mr Barry was wholly successful in his defence. Vemco was successful on the claim by Mr Milardovic which occupied the greater amount of hearing and preparation time. There is no basis for an order that the respondents should pay the applicant's costs. 49 I do not agree that Mr Milardovic's rejection of the offer made in August 2015 by the respondents was so unreasonable in the circumstances as to justify departure from the principle and policy of the Fair Work Act which is evinced by s 570(1). In August 2015 almost all the preparatory steps for trial had been completed. There had been an unsuccessful mediation in August 2015. The trial had been ordered to occur by the giving of oral evidence. The respondents bore the onus of proof under s 361. Mr Milardovic had a working theory about why his complaints had not been dealt with adequately. He had been treated at best with a considerable degree of indifference, and at worst, callously, by Mr Barry for some considerable period of time. I am not prepared to say he should have been on notice that his case was hopeless, nor that he should have acted to accept the offer made late in the trial process in August 2015. 50 Further, Mr Milardovic was entitled to consider that he had a solid claim against Mr Barry personally, given the way he had behaved. As it turned out I found Mr Barry, through his evidence on behalf of Vemco, discharged Vemco's onus of proving that the reason for the way Mr Milardovic was treated was not a prohibited reason. However, that was something it was not unreasonable for Mr Milardovic to test at trial. 51 Mr Milardovic's obvious belief in the correctness of his case against Mr Barry may have proven to be correct in relation to Mr Barry's involvement in the redundancy contravention, if there had been an allegation that Mr Barry was involved in that contravention. However, there was no such allegation and Mr Barry did not have to meet any such case. 52 There will be no orders as to costs in this proceeding.

Whether any further or other orders should be made, relating to Vemco's status 53 As part of its submissions on penalties and costs, Vemco attached a letter from the solicitors for the administrators to the solicitors acting for Vemco. There was no application for leave to file evidence in support of any application by Vemco, nor in support of submissions made. The letter was not exhibited to an affidavit, and there was no opportunity for the applicant to test what was in the letter. I have not had regard to the contents of the letter. 54 At [11] in the principal judgment, I said: Counsel for the administrators submitted that because there was an insurance policy in place and indemnity had prima facie been granted, any liability arising from the present proceeding could be dealt with by way of a call upon that insurance policy so that no party would be preferred to the first respondent's general body of creditors. 55 No admissible evidence has been filed concerning the current position of the insurer, nor has the applicant been given an opportunity to deal with whatever final position the insurer might decide to take. Whether or not the applicant might have a claim pursuant to provisions such as s 48 of the Insurance Contracts Act 1984 (Cth) is no part of this proceeding. 56 There is no basis in the evidence before the Court to make any further or other orders from those which were made on 7 December 2015 granting leave to the applicant pursuant to s 440D(1)(b) of the Corporations Act to continue the proceeding against Vemco. The proceeding has been continued, for the limited purpose of enabling submissions to be made on Vemco's behalf on issues of liability, and then on penalties and costs, both steps facilitating the finalisation of the applicant's claims against Vemco and Mr Barry . 57 As I have noted above, by s 546(4) of the Fair Work Act, a penalty may be recovered as a debt due by the person to whom it is payable. Further, in relation to the payments the Court has ordered Vemco make to Mr Milardovic in respect of his redundancy, s 53(1) of the Federal Court of Australia Act 1976 (Cth) provides: Subject to the Rules of Court, a person in whose favour a judgment of the Court is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given. 58 In other words, both the monies Vemco has been ordered to pay to the applicant by way of redundancy payment and interest on that amount, and the penalty it has been ordered to pay to the applicant, are prima facie recoverable by the applicant as debts. How the applicant may seek to recover them given Vemco's circumstances (including whether his only option will be to prove them in any future liquidation of Vemco) are not matters for this Court to decide. I certify that the preceding fifty eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.