Federal Circuit and Family Court of Australia
(DIVISION 2)

Fair Work Ombudsman v Goldream Pty Ltd [2021] FedCFamC2G 61
File number(s):	MLG 666 of 2020	
		
Judgment of:	JUDGE A KELLY	
		
Date of judgment:	21 September 2021	
		
Catchwords:	INDUSTRIAL LAW – Penalties – admitted contraventions of Fair Work Act 2009 (Cth) – underpayment of wages to employees – failure to comply with compliance notice – where proceedings brought against respondent company and second respondent – where second respondent is sole director and shareholder of respondent company – where second respondent was a person ‘involved’ within the meaning of s 550 in the contravention of s 716(5) of the Fair Work Act 2009 by respondent company – appropriate penalty to be imposed – applicable principles – penalty determined. 	
		
Legislation:	Fair Work Act 2009 (Cth) ss 539, 546, 550, 716
Restaurant Industry Award 2010 cll 13.1, 13.5, 33.2, 20.1, 34.1
Explanatory Memorandum, Fair Work Bill 2008 (Cth) par 2673 	
		
Cases cited:	A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466 
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v Austrend International Pty Ltd (No 2) [2020] FCA 1193
Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150
Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148
Kelly v Fitzpatrick (2007) 166 IR 14
Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Trade Practices Commission v CSR Ltd (1990) 12 AAR 343
Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 151 ACSR 407	
		
Division:	Division 2 General Federal Law	
		
Number of paragraphs:	38	
		
Place:	Melbourne	
		
Solicitor for the Applicant:	Australian Government Solicitor	
		
Solicitor for the Respondents:	HR Legal	

ORDERS
	MLG 666 of 2020	
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2) 	
BETWEEN:	FAIR WORK OMBUDSMAN
Applicant
	
AND:	GOLDREAM PTY LTD (ACN 168 958 772)
First Respondent

BARRY GOLD
Second Respondent

order made by:	JUDGE A KELLY	
DATE OF ORDER:	21 September 2021	

THE COURT DECLARES THAT:

1.	The second respondent, Barry Gold, the sole director and shareholder of the first respondent, was, within the meaning of ss 550(1) and 550(2)(c) of the Fair Work Act 2009 (Cth) (Act) a person involved in contraventions by the first respondent, Goldream Pty Ltd (ACN 168 958 772), in taking action as required by a compliance notice dated 26 August 2019 issued pursuant to s 716(2) of the Act and in failing to produce evidence as required in compliance with such notice.
2.	The second respondent, Barry Gold, is taken, pursuant to s 550(1) of the Act to have personally contravened s 716(5) of the Act.
THE COURT ORDERS THAT:
3.	The second respondent, Barry Gold, pay a penalty in the sum of $3,150.
4.	The penalty payable pursuant to paragraph (3) of this Order be paid forthwith.
Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT
JUDGE A KELLY
Introduction
1	These reasons for judgment explain the orders made under the Fair Work Act 2009 (Cth) (Act) in two proceedings brought by the Fair Work Ombudsman against a respondent company in which the second respondent in both proceedings, Mr Barry Gold (Mr Gold), is agreed to have been a person ‘involved’ within the meaning of s 550(1) of the Act to certain contraventions by those respective companies.
2	For the reasons which follow, I agree in the parties’ joint proposal in each proceeding and upon that basis a pecuniary penalty of $3,150 will be imposed on Mr Gold in each case.
Background
3	Mr Gold is the sole director, Secretary and shareholder of Goldream Pty Ltd (in liquidation) and Plushbear Pty Ltd (in liquidation), companies that existed in part for the purpose of providing labour hire services for restaurants which were operated by those respective companies.  It is agreed Mr Gold was the operative and controlling mind of each company with responsibility for their overall operation, management and control including in the manner in which each company responded, or failed to respond, to the compliance notices in issue.
4	Goldream conducted its restaurant in Richmond, in the state of Victoria and traded under the name ‘Friends of Mine’ while Plushbear, also conducted a restaurant in Richmond and traded under the name ‘Tall Timber’ (restaurants).
5	During 2018, the Fair Work Ombudsman undertook an audit of cafes in Melbourne.  Each of the companies the subject of these proceedings were audited.  
6	On 21 and 25 June 2018 respectively, inspectors authorised by the Fair Work Ombudsman (inspectors) conducted site visits of the restaurants and determined that the labour engaged by the companies respectively at those workplaces were being paid at a flat hourly rate for all hours being worked, whether from Monday to Sunday inclusive.  Additionally, the inspectors identified each company engaged in a practice of paying the labour that had been engaged by way of direct crediting to bank accounts of the persons providing their labour and at the same time paying other monies in cash to those persons.
7	On 26 August 2019, an inspector issued a compliance notice to each company in respect of an alleged contravention of the following provisions of the Restaurant Industry Award 2010 (Award) and constituting a failure to pay: (1) casual loading (cl 13.1); (2) overtime rates (cll 13.5 and 33.2 ); (3) minimum wages (cl 20.1), and; (4) casual weekend on public holiday penalties (cl 34.1).  The contraventions were alleged to have been committed over the period 18 December 2017 to 17 June 2018.  The inspector handed each notice to Mr Gold.  Evidence filed for the purpose of the present application included the matters discussed by the inspector with Mr Gold at the time he was given each notice and what was expected of each company.
8	In their terms each compliance notice required the respective company to take certain action with a view to remedying the direct effects of the alleged contraventions and to do so within 30 days.  The notices also required the production of certain evidence.  While the companies took some steps in responding to those notices, it is common ground that neither company responded in a manner which satisfied the requirements of the respective notice and that each company lacked a reasonable excuse for having failed to do so.  It is agreed each company contravened s 716(5) of the Act in failing to comply with such notices.
9	Without descending into the detail of agreed admissions, suffice to say Mr Gold admits having actual knowledge of the notices and the actions required of each company, of the response of each company, of the inadequacies of such responses and that he was an intentional participant in the manner in which each company so responded to the respective notice.  Upon those admissions it is agreed, and I accept, the court should be satisfied Mr Gold was a person involved within the meaning of s 550 in the contravention of s 716(5) by each company.
10	Each company is now in liquidation.
Procedural history
11	On 26 February 2020, the Fair Work Ombudsman filed an application and statement of claim seeking relief under the Act in respect of the matters described above.
12	On 26 March 2020, each company filed a defence in which they detailed, relevantly, the basis upon which it was being contended a reasonable excuse existed for having not fully satisfied the requirements of the respective compliance notice.  Further, by those pleadings, Mr Gold denied actual knowledge, both of each compliance notice or the alleged failure to comply with them and the allegation he was an intentional participant in any contravention of the Act.  I note the particulars supplied by the defence was that Mr Gold had conducted himself in a manner which conformed to and had been based upon, professional legal and accounting advice.
13	The proceeding was regulated by a series of three interlocutory orders made in 2020.
14	On 10 December 2020 the parties filed a statement of agreed facts in which admissions were made and upon which the parties were content to act for the purpose of the present application.
15	On 15 February 2021, there was filed on behalf of the Fair Work Ombudsman, an affidavit exhibiting the documents relied upon in providing a relevant history together with submissions.
Applicable principles
16	What follows below is largely drawn from the careful submissions prepared on behalf of the Fair Work Ombudsman.  By way of overview, it is necessary to consider the principles that are to be applied in the consideration of an agreed compromise as to the relief which is said to be appropriate to admitted contraventions of the Act together with those which inform the determination of penalty that is appropriate in all of the circumstances.
17	I agree in the submission that where parties jointly seek orders in a legislative context respecting civil penalties the following considerations are to be recognised or addressed: (1) there is a public interest in the settlement of proceedings instituted by a regulator having a function under the subject legislation to secure its enforcement and appropriate relief; (2) orders proposed jointly must not be contrary to, and instead must at least be consistent with, the public interest; (3) the court must be satisfied the orders being proposed are within power and further, are appropriate in the circumstances of the case; (4) upon being so satisfied, a degree of restraint should be exercised in scrutinising the proposed terms of compromise and recognise that they have been agreed by persons standing at arms’ length and, where appropriate, with the benefit of independent legal advice; (5) the court is entitled to treat a parties’ consent to the proposed orders as reflecting an admission of such facts as are necessary or appropriate to the relief which has been agreed; (6) these considerations are appropriate under the Act: see generally, Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405, [70]-[73]; Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482, [57] (Cth v DFWBII); Fair Work Ombudsman v Austrend International Pty Ltd (No 2) [2020] FCA 1193, [81]-[82].
18	As to the principles relevant to penalty, by s 546(1), this court is an eligible court for the purposes of the imposition of a penalty in respect of a contravention of a civil remedy provision of the Act.  In the determination of appropriate relief, appropriate regard must be had to the facts and circumstances giving rise to the contravention and of the need to sustain public confidence in the legislative regime by which the relevant obligations are imposed: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 (Opthalmic Supplies), [91].
19	In the seminal decision of Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown  (2017) 275 IR 148 at [36], Bromwich J identified the following steps to be considered in the determination of penalty and relief under the Act:
a)	identify the separate contraventions, with each breach of each statutory and Award-based obligation being treated as a separate contravention;
b)	consider whether each separate contravention should be dealt with independently or upon some degree of aggregation for those contraventions arising out of a course of conduct;
c)	consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did;
d)	consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation;
e)	consider the overall penalties arrived at, including by reference to those which may be proposed by the parties or each of them (in this proceeding, both being the same jointly agreed amount), and apply a principle of ‘totality’, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary.
It is convenient to note that in stating those propositions, his Honour essentially adopted the submissions advanced in that proceeding on behalf of the Fair Work Ombudsman and that the approach, commended by Bromwich J has been followed on numerous occasions: see, e.g, Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60, [11] (Anderson J); Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 151 ACSR 407, [144] (Wigney, Beach and O’Bryan JJ); Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062, [126] (Allsop CJ).
20	I agree in the submission that where, as here, there is only a single contravention of a civil remedy provision as opposed to a course of conduct such as in each of the present proceedings, the second and third steps stated by his Honour are not applicable.
Consideration
21	I am satisfied, upon the principles considered above, that the compromise which has been put before the court by the parties as an agreed, appropriate approach to the determination of relief.  In expressing that conclusion I do not ignore that the court is not bound by a proposed penalty as agreed between parties and that it “should only impose the recommended penalty insofar as it is satisfied that it is appropriate in all the circumstances of the case”: Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062, [126] and cases cited (Allsop CJ).  I note the parties were able to achieve their compromise following the institution of the proceeding and that such compromise was obtained at arms’ length and in circumstances where each of them has had the benefit of independent legal advice.
22	The Court may impose maximum penalties of 30 penalty units which translates to a maximum penalty of $6,300 in each proceeding (based on the value of the penalty unit at the relevant time): Act, s 539.  Consideration of the maximum penalty that could be imposed on Mr Gold is appropriate as providing an indication of the view taken by the legislature of the consequences of having engaged in contravening conduct.  It is also appropriate in a comparative exercise of locating where the contraventions sit as against a maximum yardstick.
23	The primary purpose of civil penalties is to promote the public interest in compliance and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravener and by others who are in a position to contravene legislation: Cth v DFWBII at [55] citing Trade Practices Commission v CSR Ltd (1990) 12 AAR 343, [40]. Both specific and general deterrence are the principal (and perhaps only) object of the civil penalties in the Act.  In amplification of the primary purpose of deterrence, the High Court has underlined that the achievement of that purpose necessarily depends upon a penalty having the necessary ‘sting or burden’ to secure ‘the specific and general deterrent effects that are the raison d’être of its imposition’: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, [116].
24	Beyond those important statements of principle, a panoply, non-exhaustive and non-rigid list of other factors have been repeatedly adopted include the following and are recognised as being of potential relevance only in as much as providing assistance in setting a penalty which properly reflects an appropriate deterrent value.  The catalogue of potentially relevant factors were endorsed in Kelly v Fitzpatrick (2007) 166 IR 14 at [14] by Tracey J:
a)	the nature and extent of the conduct which led to the breaches;
b)	the circumstances in which that conduct took place;
c)	the nature and extent of any loss sustained as a result of those breaches;
d)	whether there has been similar previous conduct by the respondent;
e) 	whether the breaches were distinct or arose out of one course of conduct;
f)	the size of the business and the enterprise involved;
g)	whether or not the breaches were deliberate;
h)	whether senior management was involved in the breaches;
i)	whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with enforcement authorities;
j)	the need to ensure compliance with minimum standards by provision of effective means of investigation and for specific deterrence.
25	I accept the submission that these recognised factors should not be employed in either a prescriptive or restrictive manner but that they provide guidance as to considerations that may be useful in the exercise of the statutory discretion when imposing a penalty: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11], (Gyles J); Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151, [74] (Mansfield J).
26	The caution to be adopted against treating these factors as a rigid catalogue has been affirmed on several occasions.  Recently, in Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75, at [99] Allsop CJ, Besanko, White, Wigney and Bromwich JJ, stated that “the task of the Court is to fix a penalty that pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.”  The five-member Full Court endorsed the view that such “factors are not mandatory criteria and can lead to over-elaborate reasoning for a task that is a discretion at large as to what is appropriate to the object concerned”: citing A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466 at [6] (Gyles J).
27	Upon the facts and circumstances of this case, despite his initial denials by his defence, it must be recognised that Mr Gold was personally involved in the implementation of the design which led to the underpayment of Award entitlements on the contraventions of the Act.  The legislative warrant for including a power in the Act for the issue of a compliance notice was to provide a mechanism for dealing with non-compliance with the minimum entitlements created or recognised by the legislation and to offer an efficient, cost-effective alternative to the institution of court proceedings by a regulator which would also provide a defence in (or more accurately, a barrier to) any civil penalty proceedings where the notice was complied with: Act, s 716(4A); Fair Work Bill 2008 (Cth), Explanatory Memorandum at [2673].  Additionally, where a person complies with such a notice, the person neither taken to have admitted a contravention nor found to have done so: Act, s 716(4B).  Seen from those perspectives, the inclusion of a statutory power to issue a compliance notice facilitating the prompt rectification of identified contraventions of the Act, including in relation to underpayments, provides “an important part of the armoury of Fair Work Inspectors in fulfilling their functions.” Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150, at [29] (Smith J).
28	With those considerations in mind, it is accepted by the parties, and I agree that the subject compliance notices set out clearly the steps required to immediately remedy the direct effects of the contravening conduct to which they referred and that such steps were not taken promptly.
29	Indeed, despite notice, each of the companies and Mr Gold were on notice that their purported compliance with the notices did not satisfy the express requirements which were stated.  Further, there was a continuing failure by the companies to comply with the notices until they were placed in liquidation on 16 July 2020.  I agree that such conduct is to be taken into account in the determination of a penalty as sought against Mr Gold in circumstances where he was the directing mind and will of each company.  I also accept the submissions that the contravening conduct was both serious and extended over a period of time which thereby demonstrates a disregard by the respondents for the discharge of their obligations under the Act.  
30	Commendably, the Fair Work Ombudsman accepted that the nature of the contravening conduct was not at the most serious end of the spectrum and that neither the companies, nor Mr Gold had disregarded the compliance notices in their entirety.  To the contrary, the defence as filed in the proceedings contains some suggestion that the stance which was adopted by the respondents reflected (whether or not correctly), their response upon the accounting and legal advice that they had sought and obtained.  At the same time, the seriousness of the conduct is also illustrated by the failure to take steps that were clearly available to be taken and which had been clearly explained at the time of service of the compliance notices.  It was underscored by the multiple failures of compliance as admitted for the purposes of this application.
31	It was submitted on behalf of the Fair Work Ombudsman that in practical outcome there was little difference to what would have occurred if the notices had simply been ignored; that is, a large number of the underpayments identified by the investigation remained unquantified and unrectified, potentially resulting in employees of both companies not receiving their statutory entitlements.  In the result, with both companies now being in liquidation, those potential underpayments will now remain permanently unrectified.  Some indication of the scale of that practical outcome may be provided when it is recognised that the contravening conduct occurred over a period of seven months and involved in all some 35 employees.
32	I do not ignore that until making the admissions recorded in the parties’ statement of agreed facts, reliance had been placed by the respondents upon the lack of available records as a basis for the stated inability to explain deficiencies in the response to the compliance notices.  I agree that generally, no reduction in the assessment of the severity of a contravention may be explained away by the lack of available records which, had statutory requirements been properly observed in a proper and timely way, would otherwise have existed.  I also agree that the lack of available records presented no barrier to the companies or Mr Gold in implementing the approach recommended by the inspector of making contact with the subject employees.
33	Insofar as the nature and extent of loss may be considered, it is self-evident that monies which should otherwise have been applied in discharge of existing obligations to employees has instead been retained by the companies, each of which was wholly owned by Mr Gold.  Upon the basis of the profit and loss statement supplied by the liquidators, somewhat curiously their sole source of income is described as “Labour Hire Income” being income received from a family trust.  The curiosity which emerges from this description is that it does not appear to take account of the income derived by each of the companies from the conduct of the restaurants which they operated in Richmond as described above.  In any event, neither company had any assets of substance. Each is indebted to Mr Gold for a loan of $12,000.  
So far as concerns the dissipation of resources, it only appears that Goldream has paid a dividend to Mr Gold of $96,000, a sum that was paid in 2018; that is either at the time of or after the company had engaged in the contravening conduct.  In the absence of more direct evidence, I am readily prepared to infer that any reduction in the expense of employing the personnel achieved by the contravening conduct was to Mr Gold’s direct and immediate benefit.
34	There was considerable force in the submission made on behalf of the Fair Work Ombudsman that the conduct which is the subject of this proceeding has occasioned a real public cost arising as a direct consequence of the failure to comply properly with the compliance notices and the stance taken in the defence of the proceeding until admissions were made in late 2020.
35	The Fair Work Ombudsman acknowledges Mr Gold has now taken a more cooperative stance, in particular, by making the admissions and in the preparation of the statement of agreed facts and that this has saved against the waste of public time and resources including those required for the conduct of a contested hearing on liability.  I agree on the submissions that cooperation and the making of admissions early in the course of an investigation or soon after the commencement of proceedings may well support a sizeable discount on penalty, however, this principle abates in its application the longer a respondent resists before making appropriate admissions.  The suggestion of a 20% discount is entirely appropriate in this case.
36	The Fair Work Ombudsman correctly identifies specific deterrence is an important consideration in the present case, particularly in circumstances where Mr Gold appears to maintain substantial business interests as reflected by his ongoing directorships in no less than six other proprietary companies.  In those circumstances I agree there is a real risk Mr Gold’s future involvement in such enterprises carries an ongoing risk that employee entitlements will not be honoured with the result that he should be left in no doubt that contravention of the Act cannot be tolerated particularly having regard to the protective objects it seeks to secure.
37	Likewise, I agree in the need for general deterrence as a significant factor.  Upon the evidence, of all compliance notices issued by the regulator in the 2019-2020 financial year, no less than 25.6% of such notices were issued in relation to the café and restaurant industry.  Whether that data is in part a reflex of the regulator’s decision to audit that sector of industry is not known.
Conclusion
38	Orders will be made in the terms sought.

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of Judge A Kelly.	

Associate:

Dated:	21 September 2021