Slondia Nominees Pty Ltd v Moore

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY FAIR WORK DIVISION SAD 290 of 2012

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

JUDGE: MANSFIELD J DATE: 18 APRIL 2013 PLACE: ADELAIDE

Introduction 1 The appellant (Slondia) owns a business which operates in South Australia, Western Australia and Victoria under the name "Mike's Multi Service" (the business). It provides shoe and other leather product repairs and other services such as key cutting and engraving and the like. 2 Slondia employed Ms Moore as a shoe and leather repairer on a casual basis between June 2009 and July 2010, and then on a permanent part-time basis until 29 December 2010. Her employment was brought to an end on that date. 3 Ms Moore successfully claimed in the Federal Magistrates Court that Slondia, by terminating her employment in the circumstances, contravened a civil remedy provision specified in s 539 of the Fair Work Act 2009 (Cth) (FW Act): Moore v Slondia Nominees Pty Ltd [2012] FMCA 273 (the contravention judgment). The contravention was because, in terminating her employment, Slondia had taken adverse action against Ms Moore because she had exercised a workplace right, contrary to s 340(1) of the FW Act. The exercise of the workplace right was the bringing in the Industrial Relations Court of South Australia a claim for $4731 and interest for underpayment of wages in the period July 2009 to April 2010 (the underpaid wages claim). 4 On 31 October 2012, the Federal Magistrate in Moore v Slondia Nominees Pty Ltd (No 2) [2012] FMCA 989 (the penalty judgment) made orders in respect of the contravention that: (a) pursuant to s 545(2)(b) of the FW Act there be an order awarding compensation for the loss that the appellant has suffered because of the contravention in the amount of $20,000.00; (b) pursuant to s 546 of the FW Act there be a pecuniary penalty imposed on Slondia in the amount of $15,000.00; and (c) pursuant to s 546(3) of the FW Act the pecuniary penalty referred to in (b) be paid: (i) as to the sum of $7,500.00 to the Commonwealth; and (ii) as to the sum of $7,500.00 to Ms Moore. 5 Slondia now appeals from the contravention judgment. It says that the Federal Magistrate erred in concluding that the reason, or one reason, for it terminating Ms Moore's employment was that she had brought the underpaid wages claim. 6 Ms Moore cross-appeals from the penalty judgment. She says the penalty imposed should have been $30,000, and that the whole of the pecuniary penalty should have been paid to her.

The evidence 7 Some of the evidence was not contested. It can be noted shortly. 8 In South Australia, Slondia has two outlets in the West Lakes Shopping Centre and one at the Tea Tree Plaza Shopping Centre. Ms Moore worked almost entirely at the West Lakes outlets. The second outlet at West Lakes opened only in August 2010. 9 In April 2010, Ms Moore had complained that her hourly rate should have been $22.50 rather than the $18 she was being paid. She was then paid $22.50 per hour until her employment was terminated. There was no adjudication that that was the correct rate; Slondia simply agreed to pay it. 10 The underpaid wages claim was brought on 24 November 2010, and represents the difference between those two hourly rates between June 2009 and April 2010. The underpaid wages claim was ultimately accepted, and Ms Moore has been paid the amount in dispute. That claim was served on Slondia on about 1 December 2010, so Slondia had been aware of it for almost a month by 29 December 2010. 11 The only issue was whether Ms Moore's employment was terminated because of, or for reasons one of which was, the underpaid wages claim: s 360 of the FW Act. 12 Section 361 of the FW Act provides: (1) If: (a) in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or for a particular intent; and (b) taking that action for that reason or with that intent would constitute a contravention of this Part; it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person provides otherwise. 13 Consequently, Slondia had to prove that the underpaid wages claim was not the reason, or one of the reasons, why it terminated Ms Moore's employment. It was not in dispute that the termination of employment was adverse action, or that the underpaid wages claim was the exercise of a workplace right. 14 Clearly the onus of proof to be discharged is on the balance of probabilities: see per Lander J in Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14 at [195] (Barclay FC). 15 To discharge the onus of proof, Slondia called three witnesses: its Managing Director Mr Mercanti; its South Australian State Manager Mr Davies; and its Victorian State Manager Mr Zaharijevski, who had in 2010 been visiting Adelaide on a regular basis to assist Mr Davies in his role due to his experience. 16 The business operated on the basis that its individual retail outlets operated as separate units, and each outlet obtained its supplies from a "wholesale" unit within the business. Consequently, the various outlets collectively built up significant trade debts to the wholesale supply division. 17 Mr Davies' evidence was that the three Adelaide stores were under financial pressure in the latter part of 2010. Mr Mercanti had been limiting the stock they could acquire from the "head office" to reduce costs. In consultation with Mr Zaharijevski he had decided in late December 2010 to reduce the hours of all his full-time staff and to cease the employment of Ms Moore. He said he did so because she was the only part-time employee engaged as a stitcher and shoe repairer. His decision was motivated only by the need to cut back for financial reasons; the underpaid wages claim played no part in it. He said in about late December 2010 he had employed a casual employee at the Tea Tree Plaza store, but she was employed for her sales skills and was not a stitcher. 18 Mr Zaharijevski confirmed that evidence. 19 Mr Mercanti gave more extensive evidence about the financial pressures on the business, including the pressure he was applying to Mr Davies in relation to the South Australian outlets, increasingly so during the latter part of 2010. He was part of the decision-making process to terminate Ms Moore's employment. He did so for financial reasons. He said he did not take into account the underpaid wages claim.

The Federal Magistrate's Reasons 20 In the contravention judgment, it was accepted that there was a downturn in the business during 2010, including pressure from the Australian Taxation Office in respect of a significant debt. 21 It was also accepted that Ms Moore's skills were limited to stitching, so they did not extend to store opening, closing and management. It was also accepted that each of the three witnesses regarded Ms Moore as a casual employee (incorrectly, as his Honour found) and at [70] that: … in a general sense, if employees are to be released I can proceed upon the basis of the likelihood that casual employees will be released first. 22 It was noted that Ms Moore gave no evidence of any direct communications which would support her claim that she was terminated by reason of the underpaid wages claim. From her perspective, that would be apparent from the relative coincidence of the two events, and other general facts. Of course, she had no onus to discharge in that regard. 23 After referring to the evidence of the three witnesses, and making some general comments on it, the Federal Magistrate said at [77] that he was not satisfied that the real reason for Ms Moore's termination was the implementation of necessary cost-cutting measures in the business. 24 Reasons for that conclusion were given. 25 Firstly, there was the temporal proximity of the termination to the service of the underpaid wages claim, which he said was "not explained by the evidence". The Federal Magistrate continued at [78]: … the sacking follows on the service of the proceedings by about a month, after the busy Christmas trading period had come to an end. The dismissal did not take place during the earlier part of the year (when trading conditions were also, relatively speaking, adverse to some degree); it did not take place after the busy Christmas trading period and when the applicant had returned to work for a period of time. It took place shortly after the filing and service of the proceedings. In other words, it followed on shortly after the filing and service of the proceedings. 26 Then [79] reads: Moreover, the dismissal seemed to be an isolated event rather than part of a general strategy for dealing with the difficult trading conditions. There was no evidence adduced to indicate any planned reduction in working hours or in staff across the various stores or even within the South Australian stores. This employee is the only employee whose services have been dispensed with. 27 The rejection of the claim of financial pressure being the reason for the termination is explained in [80]-[82]: The magnitude of the amount claimed by the Australian Taxation Office which constitutes Annexure TM4 to the affidavit of Mr Mercanti, if they gave rise to the imperative for real cost cutting measures, would surely have resulted in more employees being dismissed than simply this part time or casual employee at one store in Adelaide. I am not satisfied on the evidence presented by the respondent that the dismissal of the applicant was an incident of or part of a general cost cutting strategy. In other words, there was no evidence of any systematic or thorough going review of operations and of staffing levels (or hours allocated to staff) generally. … There may be other explanations for the temporal proximity of events. There was no explanation provided by the respondent for the temporal proximity of these events. That being the position, their case must be taken to be that the temporal proximity was simply coincidental. It is in that context that I look to the absence of other evidence of employees dismissed or employee hours reduced, and the other evidence referred to above and hereunder, I am not satisfied that the temporal proximity is a matter of coincidence. As I have indicated, passim, that I accept the general proposition that 2009 and 2010 saw a contraction in the amount of trading the respondent was able to achieve but no evidence was produced to me to indicate that as a response to that predicament, the respondent engaged in a planned reduction in employee levels or in employee hours. If cost cutting was the real reason for the dismissal of the applicant other instances of such dismissals in an enterprise of the size of the respondent's business enterprise would have been expected to have occurred. It is not even a case, in my view, of there being two explanations or reasons for the respondent dismissing the applicant such as to bring into play s.360 of the Act. 28 By way of further explanation, the Federal Magistrate observed that two interstate outlets of the business suffered a greater reduction in gross sales between 2009 and 2010 than the West Lakes outlet, but there was no evidence of employee reduction at those outlets. 29 Finally, at [84]-[85] the Federal Magistrate said: The evidence presented by the respondent persuaded me that the decision to terminate the employment of the applicant was made by Mr Mercanti and implemented by Mr Zaharijevski in concert with Mr Davies. It is one thing for Mr Mercanti to institute a policy but it is another for him to involve himself in the selection of the single employee who is to bear the brunt of the policy. If the reason advanced in the evidence of the respondent for the dismissal was the genuine reason for it, the nomination of the applicant for dismissal is more likely to have been the initiative of Mr Davies. But Mr Davies was only carrying out Mr Mercanti's decision to dismiss the applicant albeit that Mr Mercanti instructed Mr Zaharijevski to assist in that action. If the reason advanced was the real reason for the dismissal I would have expected there to have been some cursory consideration given as to whether the decline in sales was related more to retail activity than repair activity but there was no evidence that such consideration was ever given. 30 As to penalty, in the penalty judgment, the Federal Magistrate observed correctly that s 545(1) of the FW Act provides for a broad discretion to be exercised, including by s 545(2) in relation to compensation, and that s 546 similarly gives a broad discretion to impose a pecuniary penalty, to the prescribed maximum which in the circumstances was $33,000. 31 As it is not the subject of the cross-appeal or any notice of contention on the cross-appeal, I merely note that compensation of $20,000 was awarded. 32 As to the pecuniary penalty, after referring to certain relevant authorities, the Federal Magistrate referred to the absence of similar contravening conduct by Slondia, that its conduct "was deliberate and upon the initiative of the highest level of management", and that no contrition had been exhibited. He referred, in the context of the need for both specific and general deterrence, to the nature and geographical scope of the business, and to its gross earnings (presumably the figure at [38] refers to calendar year gross earnings rather than the December 2010 gross earnings). 33 At [39] and [40], the Federal Magistrate responded to a particular submission of Slondia. He there said: The written submission of the respondent on penalty included a contention that my findings were consistent with an acceptance that the employees of the respondent had given evidence as to their honest belief of the reasons for the dismissal of the applicant but I do not think that submission can be sustained. I did not posit an "unconscious" reason in opposition to an honestly held "conscious" reason as to the explanation for the dismissal. While it is the case that there is no discussion on the issue of the credit of any of the witnesses in my Reasons which is unrelated to my discussion of what was the real reason for the dismissal of the applicant, my primary finding - that the real reason for dismissal was the applicant's pursuit of recovery of underpayment of wages - necessarily entailed my rejection of the account of the reason for dismissal given by the employer witnesses. Certainly I came to the conclusion that Mr Mercanti had decided to effect the withdrawal of employment to the applicant once the claim in the Industrial Court had been received. With Mr Mercanti having made that decision he was then assisted in implementing it by Mr Zaharijevski and Mr Davies. Moreover, I made a specific finding that there was not more than one reason for the applicant's dismissal and that s.360 of the Act had no scope for operation in the circumstances of this case. 34 In the light of those observations, the pecuniary penalty imposed was $15,000. 35 The context for those remarks is the decision of the High Court in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 (Barclay HCA). That decision reversed the decision of the Full Court of this Court in Barclay FC, referred to above, upon which the Federal Magistrate in the contravention judgment had relied. His Honour explained in the penalty judgment at [4]: However, my reliance on the decision of the Full Court did not include reliance on those parts of it in which the High Court identified error. Those errors were related to the facts of that case involving as they did a termination from employment of an officer of a union (the errors being the erroneous distinction between "conscious" and "unconscious" reasons; the insistence that the contravention could only be determined objectively; and the so called "logical consequence" of the applicant's status as an officer of a union". I should also note that I relied upon the judgment of the dissentient in that case (Lander J) at [31] of my Reasons. 36 Finally, the Federal Magistrate addressed s 546(3) of the FW Act which empowers a Court to order the penalty or part of it to be paid to the Commonwealth, or to a particular organisation or a particular person. 37 His Honour accepted that the exercise of that power should not be a proxy for "an underlying intention to award costs", as s 570 directs when costs may separately be awarded. As the penalty provided for both general and specific deterrence; and for the significant impact of the contravention on Ms Moore, in his discretion the Federal Magistrate ordered one half of the penalty be paid to the Commonwealth and one half to Ms Moore.

Consideration 38 The first issue which arose was whether the penalty judgment, and in particular what was said at [39] and quoted above at [33], could be taken into account when considering whether there was error in the conclusion in the contravention judgment. 39 The Orders page of the contravention judgment indicates that the Federal Magistrate had completed his reasons for his conclusion. It reads: UPON NOTING that the Court is satisfied that the respondent had contravened the civil remedy provisions referred to in s 539 of the Fair Work Act 2009 in the manner specified in the Application filed on 24 February 2011 and then an order is made adjourning the matter to a date to be fixed to determine the pecuniary penalty and compensation claims. 40 There is, of course, authority to support the proposition that there is a strong public interest in the finality of litigation so that a losing party should not be permitted to re-open a case because better evidence about some matter in dispute is available and might have changed the result: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; Davis v Insolvency and Trustee Service Australia (No 2) (2011) 190 FCR 437. 41 In Hy-Tec Industries Pty Ltd v Constable (No 3) (2006) 233 ALR 323 Raphael FM considered whether he had the power to remove from a published judgment, by a corrigendum, some findings adverse to a solicitor for one of the parties after the solicitor had complained of them because the Federal Magistrate accepted that they may unfairly reflect on the ability of that solicitor. The Federal Magistrate concluded that he did not have the power to do so. Clearly, that circumstance is different from the present, because the final orders had been drawn up and sealed. 42 The principles laid out in Bailey v Marinoff (1971) 125 CLR 529 at 530 and 539, and in DJL v The Central Authority (2000) 201 CLR 226 at [38], and applied by Raphael FM do not directly apply to the present question. 43 Raphael FM also referred to decisions in which either ex tempore reasons for judgment had been altered in the revised final version (Bar-Mordecai v Rotman [2000] NSWCA 123 and Bromley v Bromley [1965] P 111) or had been altered by adding to an orally delivered reserved decision: Todorovic v Moussa (2001) 53 NSWLR 463 (Todorovic). Clearly, the decision in Todorovic is closest to the present circumstances, although the description of when a change or expansion of orally delivered reasons is permitted in the three cases is not significantly different. 44 In Todorovic, the trial judge had preferred the evidence of one witness over that of another. One ground of appeal was that that conclusion was inconsistent with incontrovertible evidence and with other findings. Another complained of the adequacy of the reasons. Another complained that the trial judge, after the oral reasons delivered in a reserved judgment, had added a finding that he did not accept the witness as an accurate witness whereas he had simply described that evidence in his reserved judgment delivered orally. 45 In Todorovic after reviewing the authorities including Lam v Beesley (1992) 7 WAR 88, Beasley JA (with whom Powell JA and Sperling J agreed) said at [46]: Lam v Beesley involved the reasons for judgment given by a magistrate in a summary criminal trial. In a civil action, I would consider that the appropriate test in determining whether an alteration to a judgment is permissible is whether the change is one of substance in fact and not the higher test stated by Owen J in the case of a criminal trial. Her Honour's reasoning and conclusion on that question (as to which Sperling J at [62] expressed some caution) in the particular circumstances is at [51]-[52] in the following terms: How then should the addition of his Honour's finding on Mr Fefelov's credit be categorised. On one view, the addition could be seen as a mere formality - something overlooked by the trial judge when giving his oral reasons. The finding did not change his Honour's ultimate finding. Rather, it was wholly consistent with it and therefore, it could be argued, could not have come as a surprise. There are arguments which tend to the opposite conclusion. In the first place, it was a critical finding. The rejection of Mr Fefelov as a witness of truth was an essential underpinning of his Honour's finding against the appellant. Secondly, had that finding not been made, the appellant could have rightfully complained that his Honour had failed to adequately consider relevant evidence in the case, namely, that of his corroborative witness. Those two matters alone, in my view, point persuasively to the additional statement in the judgment being one of substance and therefore impermissible. 46 In that circumstance, the Court treated the judgment as if the additions had not been made: see Palmer v Clarke (1989) 19 NSWLR 158 at 165. Without that passage (and, as it transpired, in any event), it was apparent that the trial judge failed to give adequate consideration to that evidence and failed to give adequate reasons for his decision. 47 In this matter, counsel for both parties made only brief oral submissions on this point. I therefore propose to adopt the approach explained in Todorovic. It was not suggested that that approach should not be followed. 48 The result of doing so is that, in my view: (1) the Federal Magistrate's reasons in the contravention judgment should be treated as the reasons for the finding of contravention, without regard to [39] of the penalty judgment; (2) the orders made by the penalty judgment should be set aside, because (i) the Federal Magistrate failed to give adequate reasons for his conclusion, (ii) the Federal Magistrate failed to consider all the evidence, and (iii) even taking into account [39] of the penalty judgment, the Federal Magistrate failed to give adequate reasons for his decision; and (3) the matter should be remitted to the Federal Magistrates Court for a re-hearing before a different Federal Magistrate. 49 I would, but for those conclusions, dismiss the cross-appeal. 50 In part, it should be noted, the course of the hearing did not clearly indicate to the Federal Magistrate that the credit of each of the three witnesses called by Slondia was directly in issue. It is necessary to explain why that is so. 51 There were no written submissions on behalf of Ms Moore in the Federal Magistrates Court. Slondia filed an outline, at the same time as it filed the affidavits of its three witnesses. Relevantly for present purposes, it said Ms Moore's skills were confined to stitching so she could not be left in an outlet alone for any length of time (as was accepted by the Federal Magistrate), that the business "performance" deteriorated during 2010, that Mr Mercanti as managing director required that "all areas were to be reviewed with the intention of reducing costs significantly", including as to the number of employees and their hours of work, and that Ms Moore was terminated for that reason and has not been replaced. It acknowledged a new casual had been taken on at the Tea Tree Plaza outlet to increase sales there, and not as a stitcher, and said that person had also ceased to work for the business. 52 As the Federal Magistrate pointed out, there was no direct evidence from Ms Moore of Slondia having the intention to terminate her because of the underpaid wages claim. 53 Mr Davies' evidence in chief, through his affidavit of 7 November 2011, largely is reflected in the Federal Magistrate's contravention judgment. 54 His Honour does not refer to the evidence of Mr Davies about the nature of the West Lakes outlet where Ms Moore worked. When she started, that was the only West Lakes outlet (West Lakes one), and there were four full time employees, including himself; they also assisted later at the second West Lakes outlet (West Lakes two) and at Tea Tree Plaza (each of which was generally staffed by one person only at any time). The opening of West Lakes two in August 2010 did not result in any staff increase. Nor does his Honour refer to the evidence in Mr Davies' affidavit about the matters discussed between Mr Davies and Mr Zaharijevski about saving costs, after the busy Christmas period, by reducing staff in the outlets from two to one, or from three to two. Mr Davies' cross-examination was quite brief. One of the full-time employees was allocated to West Lakes two. Ms Moore's status as casual or permanent part-time was explored, as was the April 2010 rate increase. 55 As to the decision to terminate Ms Moore, Mr Davies said the December period was the busiest period but was down on previous years. Both the West Lakes one and Tea Tree Plaza outlets had reduced in sales from the previous year. Mr Davies accepted the 2010 sales had reduced by more at Tea Tree Plaza than West Lakes one, but explained that Tea Tree Plaza normally ran with one person so it could not be cut back, whereas West Lakes one normally ran with three persons (including Ms Moore) so they "just took the extra person off that". Mr Davies referred to the gross sales figures for both those outlets for 2009 and 2010, and to the new casual sales person at Tea Tree Plaza who was engaged for limited hours and days to increase its sales; he said otherwise it had only one person working there because its sales were only about two thirds of those at West Lakes one. 56 There was no direct challenge to Mr Davies' credit. There was no exploration of how any staff cutback might otherwise have been accommodated. There was no challenge to Mr Davies' evidence about the staffing numbers required to operate Tea Tree Plaza or West Lakes two. There was no exploration of how costs cutbacks might otherwise have been effected. There was no suggestion that, in staffing terms at least, the South Australian part of the business was any more sophisticated than Mr Davies described. There was no exploration of whether the cost cutbacks were not really required. Indeed, he was not asked to comment on the underpaid wages claim at all. Nor was he asked to respond to the claim of Ms Moore about why she was terminated. His evidence in chief, by his affidavit, was that he was told about the underpaid wages claim by Mr Mercanti, but … I did not get involved. I did not know whether the claim was being accepted or rejected. All I did was tell the Managing Director that I thought [Ms Moore's] pay concerns had been addressed earlier in the year. 57 The cross-examination explored the April 2010 pay rise a little. Mr Davies said he was authorised by Mr Mercanti to agree to the increase if Ms Moore was worth it, and he agreed because she was a valued employee. He said she seemed happy with that. There was no cross-examination to suggest that Ms Moore conveyed any potential claim for that rate retrospectively to July 2009. 58 Mr Zaharijevski's evidence was also not really challenged. His evidence in chief is largely summarised in the contravention judgment, but the Federal Magistrate does not record his evidence that he had to make more hours cuts (the cross-examination did not suggest that was confined to South Australia), and in South Australia he and Mr Davies decided to terminate Ms Moore as the only casual employee and cut overtime, as approved by Mr Mercanti. He said he knew only generally of her dispute about having been underpaid. The cross-examination drew out that the period to Christmas was a busy period, but less busy than usual; that in the normal times before that busy period in South Australia it was a struggle to maintain hours of work for all; that, after the instruction from Mr Mercanti to cut hours generally, he was the one who terminated Ms Moore; and about the different versions of himself and Ms Moore about their conversations when he told her that her hours were to be cut. It was common ground that he told her that it was because the business could not afford to keep her on at the time, and that she said "Stop bullshitting me". Mr Zaharijevski said, after some prodding, that the only explanation for her comment of which he was aware was the underpaid wages claim; he did not know at that time whether the underpaid wages claim had been addressed. 59 The cross-examination did not, in any meaningful way, challenge Mr Zaharijevski's evidence about the instructions to cut costs and hours generally, or why he and Mr Davies decided that Ms Moore should be terminated. There was no direct challenge to his credit on those issues. There was no explanation of how any staff cutback might otherwise have been made, and no assertion that in South Australia staff cutbacks were not required or were directed at Ms Moore by reason of the underpaid wages claim. 60 Mr Mercanti's evidence was more substantial. His affidavit is largely summarised in the contravention judgment. 61 The Federal Magistrate drew some inferences from the size of the business. It operates in three States, but only with 40 or so outlet employees, and 20 or so employees in the wholesale and shop fitting areas. I will refer to that evidence in a little more detail below. 62 Mr Mercanti agreed that he was asked in late December 2010 to approve the termination of Ms Moore's hours, as January is the quietest month, and she was the only casual employee (as previously noted she was a permanent part-time employee, but the Federal Magistrate accepted that each of Slondia's witnesses believed she was a casual employee), and the only specialist stitcher so she could not operate an outlet on her own. 63 His cross-examination explored the number of casual employees working in outlets in Victoria and Western Australia. It explored the "Customer Aged Trial Balance" records which Mr Mercanti produced: it showed significant internal indebtedness of a significant number of stores, well above their "limit", but Mr Mercanti acknowledged that the allocation of credit (or surplus funds) to reduce that indebtedness was random. The Federal Magistrate commented on this matter at [61] of the contravention reasons (perhaps erroneously saying that the allocation of debt for supply of goods was also random when the evidence did not explore that issue). The cross-examination explored the reasons for the opening of the West Lakes two store; and, from the monthly "Sales Calendar" to 31 December 2010, the comparative performance of the Tea Tree Plaza and West Lakes outlets. The Federal Magistrate observed of that evidence at [83] that two outlets interstate had a greater percentage reduction in gross sales between calendar years 2009 and 2010 than the West Lakes one outlet, but … there was no evidence adduced of employee reduction measures at those stores which one would have expected to see if the dismissal of the applicant was an incident of such a strategy. 64 In cross-examination, Mr Mercanti said the "Sales Calendar" does not show that the West Lakes one outlet was performing better than either the two other interstate outlets or the Tea Tree Plaza outlet because it is necessary to factor in rent, staff wages and the like to asses profitability. When he was challenged, because he had adduced the evidence of gross sales, he said that those stores had also had "hours reduced" and that two of them (including the Tea Tree Gully outlet) had converted from a two-man store to a one man store; he was unsure if that happened before or at or after December 2010. 65 In that context, Mr Mercanti also referred to a further exhibit to his affidavit showing the hours worked by employees of the business in retail outlets between 1 July 2010 and 30 October 2011. It showed a decline in employee hours, including the "traditional market drop" after the Christmas rush. There was no cross-examination on that material, although Mr Mercanti specifically referred to it in his cross-examination. 66 The remainder of the cross-examination concerned firstly Ms Moore's communications with Mr Mercanti in April 2010: clearly there was quite a vigorous conversation and Mr Mercanti realised Ms Moore felt fairly strongly about her employment entitlements. Secondly, it concerned who made the decision to terminate Ms Moore's hours. Mr Mercanti accepted he did so, after discussion with Mr Davies and Mr Zaharijevski, and that she was the only employee to be terminated. He said he did not need to assess how the store's sales would fare in January 2011, because his 15 years experience had taught him that January was always "atrocious". He also said that the decision to terminate Ms Moore resulted from financial pressure. He said he could not pay the tax bill, that the business was on stop credit, that he had himself taken a pay cut, that he could not impose pay reductions on staff, that overtime had been cut, and that "something has got to give". 67 The Federal Magistrate's contravention judgment, in my view, does not explain adequately why he did not accept the collective evidence of the three Slondia witnesses. 68 I shall address the contravention judgment in some detail. Where the reasons are quoted above, I shall simply give the paragraph numbers. 69 Firstly, as to the temporal proximity of the termination to the underpaid wages claim, the reasons at [78] do not explain why that temporal proximity was significant. It was a period of about one month, but the termination also occurred at the end of the Christmas period, with a clearly anticipated quiet January and with uncontested evidence that there had been a progressive downturn, and ongoing concern about cost reduction because of significant and prolonged financial pressure. The comments of his Honour at [78] apparently discounting the reasons given by Slondia for the timing of the termination do not really explain why the temporal proximity should not be discounted. 70 Secondly, the passage at [79] is incorrect. The evidence is that there was prolonged concern about trading conditions, and the comment that there was no evidence of a planned reduction in working hours or staff is not correct. The Federal Magistrate had referred to some of it earlier. The evidence of Mr Mercanti, including the table he produced, was quite clear. The strategy included, as he said had occurred, reducing hours so outlets could operate as one person outlets. Ms Moore's skills, as the Federal Magistrate accepted, did not enable her to operate a one person outlet. 71 The comments of the Federal Magistrate at [10]-[12] are not based on the evidence, and for the reasons just given are not correct. As to the evidence, there was no cross-examination to suggest that more employees could or should have been terminated (other than the short-term casual sales employee at Tea Tree Plaza). It was not explored at all that the strategy of reducing hours by getting back to one person outlets enabled any greater number of terminations in South Australia, or terminations more widely, as the very brief cross-examination showed that there was only one casual employee in Western Australia who had no regular hours and only worked as required and the other outlets specifically asked about were one person operated. The evidence about the nature of Slondia's various outlets showed that each outlet was almost self-contained and a very small unit. There was no evidence, including in cross-examination, on which the finding that any outlet could have continued to operate with less employees could have been made. There was no evidence to suggest that certain outlets should simply have been closed. The concluding part of [81] is not correct. There was an explanation about the timing of Ms Moore's termination. Indeed, if it had been evidence which the Federal Magistrate did not accept, that part of the reasons would have said that that evidence was rejected and would have explained why. His Honour simply said, incorrectly, that there was no explanation for the temporal proximity of the termination and the underpaid wages claim; and, incorrectly, that there was no evidence of employee hours being reduced. 72 Finally, addressing the reasons in sequence, [84]-[85] also does not really provide a reason for the conclusion. I do not understand why the comments about Mr Mercanti's role in [84] are of significance: it was clearly a small, closely managed business and the decision to terminate Ms Moore was taken by Mr Mercanti on the advice of Mr Davies and Mr Zaharijevski. Their evidence did provide the explanation as to why Ms Moore was selected for termination: she could not operate a one person outlet and was (as they understood it) the only casual employee in South Australia. Again, if credit were an issue, this was an obvious place in the contravention reasons where the credit of Mr Davies and Mr Zaharijevski would have been addressed. Instead, the Federal Magistrate appears to have overlooked the import of their evidence about why Ms Moore was chosen to be terminated. 73 I do not accept that the Federal Magistrate in the contravention judgment simply found each of the three Slondia witnesses to be untruthful or mistaken. There is no mention of their creditworthiness in the contravention judgment. That may be contrasted with his comment about Ms Moore's credit at [75]. It was not an unfavourable assessment. Some of the findings of the Federal Magistrate are based upon a misapprehension of their evidence, rather than a rejection of it. Where comment about creditworthiness would have been expected, it does not appear. Indeed, as review of the course of the evidence exposes, there was no real attack upon the credit of any of them. That is not to say that the frontal attack is a necessary style of advocacy, but the transcript does not indicate that either Mr Davies or Mr Zaharijevski were really challenged at all about their truthfulness, and Mr Mercanti was only confronted with some errancy in the significance of certain accounting records, and to a degree with his feelings towards Ms Moore arising from her April 2010 claim (which claim was satisfied). 74 Slondia submitted that the Federal Magistrate has misapplied the onus of proof. How, or whether, the reversed onus of proof is discharged in any particular matter depends on the evidence and how it is assessed. I do not consider that the Federal Magistrate misapprehended or misapplied the onus of proof. 75 However, in this matter, Slondia called each of the three persons involved in the decision to terminate Ms Moore: cf Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1. My analysis of the reasons for the Federal Magistrate's conclusions distinguishes this case from Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 especially at 451 to which I was referred by counsel for Ms Moore. The evidence of the Slondia witnesses was largely uncontroverted, and confirmed to some degree by certain financial and other records produced. Their evidence was in part misunderstood or not accurately understood by the Federal Magistrate. That led to the Federal Magistrate discounting the more general evidence of the financial pressure on Slondia as of little or no significance. I have referred to those matters in more detail above. 76 Accordingly, I conclude that the appeal must succeed. I do not consider that the conclusion of the Federal Magistrate adverse to Slondia is supported by the evidence, because in certain critical respects his Honour failed properly to understand and assess the evidence. In other respects, I do not think the reasons adequately explain the basis for his Honour's conclusion. Indeed, if the decision were based on the rejection of the evidence of the three Slondia witnesses as not worthy of credit, clearly the reasons for that conclusion are inadequate: cf Orleans Investments Pty Ltd v MindShare Communications Ltd (2009) 254 ALR 81 especially at [152]. 77 I think the proper course is to remit the matter to be reheard before a different Federal Magistrate. That is unfortunate, having regard to the costs to the parties of doing so. However, I am not in a position myself to assess the creditworthiness of the three Slondia witnesses. This matter is unlike the outcome in Barclay HCA where the primary judge had expressly accepted the honesty of the witnesses explaining why that termination occurred. Moreover, to take that step would involve not merely accepting their evidence but concluding that it indicated the only reason for Ms Moore's termination having regard to s 361 of the FW Act. 78 The cross-appeal can be dealt with shortly. If the appeal had been unsuccessful, I would have dismissed the cross-appeal. I note that Ms Moore was given leave to amend her cross-appeal to add a complaint that the penalty imposed was manifestly inadequate, and to seek orders that the penalty be increased to the maximum of $33,000 and for all of the pecuniary penalty pursuant to s 546(3) of the FW Act to be paid to Ms Moore. 79 It is common ground that the Federal Magistrate in the penalty judgment correctly identified the relevant sentencing considerations, including the purposes for the imposition of a pecuniary penalty, in the penalty judgment at [29]-[30]. 80 Hence, the cross-appeal can succeed only if error is shown in the Federal Magistrate's exercise of the discretion on fixing the penalty. In essence, Ms Moore says the penalty is manifestly inadequate having regard to the factors identified by the Federal Magistrate. 81 In my view, the pecuniary penalty imposed was within the range which might properly have been ordered. 82 I have referred above to the matters his Honour considered. In relation to Slondia, the competing considerations include that this was its first contravention, and the likely impact on it of a significant penalty. There is little point in reciting in detail the considerations to be balanced. I am not persuaded that the penalty is inappropriate in all the circumstances and having regard to the need to sustain public confidence in the statutory regime which imposes the obligations: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91] per Jessup J. 83 The principal submission of Ms Moore as to the distribution of penalty, namely that it should be paid to Ms Moore, is based on the remarks of Gray J as to the usual order in Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union (2008) 177 IR 243 at [41] and [44] (Plancor). Counsel relied on the trouble and expense imposed on Ms Moore in bringing the claim. He pointed out that in McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006) 158 IR 181 (McIlwain), it was said at [102]-[103] that an exception to the usual rule would be where that would result in a windfall to the person prosecuting the claim. 84 In this matter, Ms Moore separately received compensation for her economic loss. In my view, that is a sufficient reason for the Federal Magistrate to have split the pecuniary penalty in this matter, and ordered part only to be paid to Ms Moore. In Plancor, in the joint judgment of Branson and Lander JJ at [70], their Honours quoted with approval the remarks of Greenwood J in McIlwain at [108] emphasising that the penalty imposed is different from, and serves a different purpose to, the compensation order. 85 As the appeal itself is to be allowed, the orders made by the Federal Magistrate will be set aside. No order will therefore be appropriate to deal with the cross-appeal. 86 The parties are agreed that, in the light of s 611 of the FW Act, there should be no order as to the costs of this appeal. I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.