Federal Circuit and Family Court of Australia
(DIVISION 2)

Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 3) [2023] FedCFamC2G 1  
File number(s):	SYG 1194 of 2017	
		
Judgment of:	JUDGE GIVEN	
		
Date of judgment:	2 February 2023 	
		
Catchwords:	INDUSTRIAL LAW – Fair Work – assessment of penalty for multiple contraventions established – deliberate contraventions – absolute lack of contrition  – “eleventh hour” corrective action  – significant need for specific and general deterrence – where respondents brought cross-claims alleging equitable set-off as part of scheme to avoid paying entitlements  – employer and individual respondents engaged in the legal industry 

PRACTICE AND PROCEDURE – reconstitution of the Court following retirement of Judge who determined liability – Federal Circuit and Family Court of Australia Act 2021 (Cth) does not mandate that same Judge must hear both stages of a proceeding – liability and penalty are separate, distinct stages of a proceeding – where respondents urge second primary Judge to stray from factual findings of first primary Judge – absent appeal outcome, liability judgment should be treated by second primary Judge as being correct – absent appeal outcome, penalty should be determined by second primary Judge on basis of factual findings of first primary Judge

COSTS – competing costs applications - whether conduct of respondents satisfies s 570(2) of Fair Work Act 2009 (Cth) – indemnity costs – whether adverse action claim is unreasonably maintained in face of express denials that action was taken because of the exercise of a workplace right– s 361 reverse onus 

WORDS AND PHRASES – Contrivance – Artifice 	
		
Legislation:	Constitution s 72 
Crimes Act 1900 (Cth) s 4AA
Crimes (Sentencing Procedure) Act 1999 (NSW) s 17 
Fair Work Act 2009 (Cth) ss 44, 90, 323, 324, 340, 346, 361, 539, 546, 550, 570, 557
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 10, 137, 214
Federal Circuit Court of Australia Act 1999 (Cth) s 79 
Federal Court of Australia Act 1976 (Cth) s 29 
Federal Magistrates Act 1999 (Cth) ss 8, 11 
Long Service Leave Act 1955 (NSW) ss 4, 10 
Workplace Relations Act 1996 (Cth) s 719 
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 17.05, 22.02, 25.04, 25.12 
Federal Court Rules 2011 (Cth) r 36.08 	
		
Cases cited:	Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392
Australian Building and Construction Commissioner v Pattinson (2022) 175 ALD 383
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428
Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333
BKW17 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 1
Cai v Tiy Loy & Co Ltd [2015] FCCA 715
Chua Chee Chor v Chua Kim Yong [1962] 1 WLR 1464; [1963] 1 All ER 102
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Commonwealth Bank of Australian v Barker [2012] FCA 1076
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corp Ltd [2007] FCA 1607
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (Bay Street Appeal) (2020) 282 FCR 1
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298
Construction, Forestry, Mining and Energy Union v Corinthian Industries (Aust) Pty Ltd (No 2) [2014] FCA 351
Esco Corp v PAC Mining Pty Ltd [2008] FCA 1018
Fair Work Ombudsman v NSH North Pty Ltd (t/as New Shanghai Charlestown) (2017) 275 IR 148
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397
Hanssen Pty Ltd v Jones (2009) 179 IR 57
Huddart, Parker & Company Pty Ltd v Moorehead (1909) 8 CLR 330
Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257
Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd [2021] FCCA 552
Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 2) [2022] FedCFamC2G 112
Kelly v Fitzpatrick (2007) 166 IR 14
Larne-Jones v Human Synergistics Australia Ltd [2016] FCCA 368
Martinuzzi v Fair Work Ombudsman (2012) 205 FCR 106
Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221
Minister for Environment v Northern Seafoods Pty Ltd [2022] FCA 656
Molina v Galloway [2022] FedCFamC2G 904
Monk v Bantram [1891] 1 QB 346
Naudi v Baig [2022] FedCFamC2G 14
O’Brien v Macskimin (1994) 75 A Crim R 348
One Tree Community Service Inc v United Workers' Union (2021) 284 FCR 489
Owners - Strata Plan No 77992 v Arouchanov [2021] FedCFamC2G 20
Orr v Holmes (1948) 76 CLR 632
R v Patrick Projects Pty Ltd (No 2) [2017] FCA 388
Ragata Developments Pty Ltd v Westpac Banking Corporation (Unreported, Federal Court of Australia, 5 March 1993)
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153
Sivwright v St Ives Group [2022] FCA 136
Stratton Finance Pty Limited v Webb (2014) 314 ALR 166
The Annot Lyle (1886) 11 PD 114
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Victoria University of Technology v Australian Education Union (1999) 91 IR 96
Wentworth v Rogers (No 3) (1986) 6 NSWLR 642
Williams v Spautz (1992) 174 CLR 509
Wong v National Australia Bank Ltd [2021] FCA 671	
		
Division:	Division 2 General Federal Law	
		
Number of paragraphs:	208	
		
Date of hearing:	24 October 2022 	
		
Counsel for the Applicant:	Mr Elliot SC 	
		
Solicitor for the Applicant:	Harmers Workplace Lawyers	
		
Counsel for the Respondents:	Mr P Zappia KC	
	Mr B Hancock 	
	Mr P Springthorpe	
		
Solicitor for the Respondents:	Atanaskovic Hartnell	

ORDERS
	SYG 1194 of 2017	
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)	
BETWEEN:	ELIZABETH KELLY
Applicant
	
AND:	ATANASKOVIC HARTNELL CORPORATE SERVICES PTY LIMITED (ACN 062 993 159)
First Respondent

J. L ATANASKOVIC & A. G HARTNELL T/A ATANASKOVIC HARTNELL (ABN 54 312 669 404)
Second Respondent

JOHN ATANASKOVIC (and others named in the Schedule)
Third Respondent

order made by:	JUDGE GIVEN	
DATE OF ORDER:	2 February 2023 	

THE COURT ORDERS THAT: 

1.	Pursuant to the declaration made by the Court on 31 March 2022, and ss 546(1) and 546(3) of the Fair Work Act 2009 (Cth) (Act), the first respondent must pay civil pecuniary penalties as follows: 
(a)	pursuant to s 323 of the Act for failing to pay the applicant’s accrued unused annual leave entitlements on cessation of her employment in full, without deduction, a penalty in the amount of $51,300; 
(b)	pursuant to s 323 of the Act and s 4(5) of the Long Service Leave Act 1955 (NSW) (LSL Act) for failing to pay the applicant’s long service entitlements in full, without deduction, a penalty in the amount of $51,300; and 
(c)	pursuant to s 323 of the Act for failing to pay the applicant’s unpaid wages in full, without deduction, a penalty in the amount of $51,300;
to be paid to the applicant, within 28 days of the date of this order. 
2.	Pursuant to the declaration made by the Court on 31 March 2022, and ss 546(1), 546(3) and 550 of the Act, the third respondent must pay civil pecuniary penalties as follows: 
(a)	pursuant to s 323 of the Act for his involvement in the first respondent’s failure to pay the applicant’s accrued unused annual leave entitlements on cessation of her employment in full, without deduction, a penalty in the amount of $10,260; 
(b)	pursuant to s 323 of the Act and s 4(5) of the LSL Act for his involvement in the first respondent’s failure to pay the applicant’s long service entitlements in full, without deduction, a penalty in the amount of $10,260; and 
(c)	pursuant to s 323 of the Act for his involvement in the first respondent’s failure to pay the applicant’s unpaid wages in full, without deduction, a penalty in the amount of $10,260; 
to be paid to the applicant, within 28 days of the date of this order. 
3.	Pursuant to s 570(2)(b) of the Act, the first and third respondents must pay the applicant’s costs and disbursements of, and incidental to, the proceedings in relation to: 
(a)	the  claims pertaining to their contraventions of ss 44, 90(2) and 323 of the Act and s 4(5) of the LSL Act, on an indemnity basis; 
(b)	the respondents’ cross-claims, on an indemnity basis; and
(c)	the applicant’s Application in a Proceeding filed on 28 April 2022, as amended, on an ordinary basis; 
as agreed or, failing agreement, by taxation pursuant to the Federal Court Rules 2011 (Cth).
4.	The application in a proceeding filed by the respondents on 10 May 2022, is dismissed.

NOTES: 

The form of the order is subject to the entry in the Court’s records.	

The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)) (Rules), or to record a variation to the order pursuant to r 17.05 of the Rules.

REASONS FOR JUDGMENT
JUDGE GIVEN: 
1	On 31 March 2022, a Judge of this Court (first primary Judge) delivered reasons for judgment at the conclusion of hearings determining various claims brought by the applicant, Mrs Kelly, under the Fair Work Act 2009 (Cth) (Act), consequent upon her resignation as General Manager from Atanaskovic Hartnell Corporate Services Pty Ltd (AHCS): see Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 2) [2022] FedCFamC2G 112 (liability judgment).   
Background
2	A summary of these proceedings can be found at [1] to [22] of the liability judgment.  In these reasons for judgment, the same defined terms and abbreviations as were adopted by the first primary Judge in the liability judgment will be re-deployed.  
3	Relevant to the dramatis personae of this case is that AHCS is the service company for JL Atanaskovic & AG Hartnell (trading as Atanaskovic Hartnell) (AH).  AH is an unincorporated partnership of which, at all relevant times, the third to seventh respondents were partners.  AH is a law firm.  The fourth and sixth respondents, Messrs Hartnell and Sophocles, respectively, were partners of AH and directors of AHCS at the time of Mrs Kelly’s resignation from AHCS.  Mr Atanaskovic was appointed as a director of AHCS on 3 July 2018 and has been its sole director since 7 January 2020.  
4	Relevant to one of the cross-claims is the entity Atanaskovic Hartnell LLP (AH LLP).  AH LLP is incorporated in England and Wales, and engaged in the practice of law in those countries.  Messrs Atanaskovic and Hartnell each held the (equivalent) role as a partner of AH LLP at all relevant times. 
5	Unless otherwise specified, reference in this judgment to the “respondents” is to be taken as a collective reference to AHCS and Mr Atanaskovic only, because it is only in respect of those parties that penalty and costs are sought by Mrs Kelly.  
6	For resolution at the liability stage of the proceedings were the following matters: 
(a)	for the applicant, Mrs Kelly, her:
(i)	Entitlements Claim; 
(ii)	Adverse Action Claim; and
(iii)	Contract Claim. 
(b)	the respondents’ cross-claims comprised of the: 
(i)	first cross-claim (visa cross-claim); 
(ii)	second cross-claim (LexisNexis cross-claim);  
which were said to give rise to an equitable set-off, greater than the quantum of the Entitlements Claim.
7	By reason of submissions made for the respondents, addressed below at [28] to [30] and [53], to [64], disputing certain of the factual findings of the first primary Judge, it is necessary to briefly summarise some aspects of the liability judgment which will be central to the question of penalty.  In that context it is convenient to set out paragraphs [10] to [11] of the liability judgment: 
When Mrs Kelly resigned on 5 August 2016, she was owed $130,427.84 (gross) in statutory and contractual entitlements in respect of unused and accrued annual leave and long service leave entitlements and unpaid salary (Entitlements). AHCS has not paid Mrs Kelly any amount in respect of her Entitlements.
AHCS alleges that it is not required to pay the Entitlements because the quantum of the damages it seeks in its cross-claim is greater than the quantum of the Entitlements and it is purportedly entitled to a set-off. While AHCS is entitled to bring a cross-claim, the assertion that AHCS is entitled to set-off any alleged loss the subject of that cross-claim against statutory entitlements under the Fair Work Act is said to be misconceived as a matter of law.  By doing so, AHCS is said to have breached a civil remedy provision and, as such, is liable to pay penalties (together with interest).
8	It will be recalled from the liability judgment that, in respect of the visa cross-claim, the respondents claimed AHCS had suffered loss constituted by the payment of fees to Deloitte for its advice to rectify a failed visa renewal application for Mr Atanaskovic (Deloitte Cost).  
9	The Deloitte Cost was initially paid by AH LLP in about late 2016. AH LLP was subsequently reimbursed for the Deloitte Cost by AH, of AH’s own volition.  Later, and solely to ground the cross–claims against Mrs Kelly, AHCS and AH entered into correspondence by which AHCS purportedly accepted liability for the entirety of the Deloitte Cost, together with an agreement that AHCS also assumed the alleged loss the subject of the LexisNexis cross-claim (letter agreements).  
10	Before the first primary Judge, the respondents said the decision to enter into the letter agreements had been made by AHCS at a board meeting held at AH’s Sydney offices on 18 May 2017, minutes of which recorded the fourth respondent, Mr Hartnell, as being present as the chair of said meeting.  However, it emerged from the cross-examination of Mr Hartnell, that he was not in attendance at that board meeting.  The first primary Judge found that the suggestion of Mr Hartnell’s attendance in the board minutes was “plainly wrong and designed to give false credence” to the contention that the matters which were recorded in the board minutes, had been carefully considered and discussed.  
11	The first primary Judge ultimately found that AHCS had suffered no loss and had “constructed a contractual artifice” in an attempt to shift loss from AH to AHCS. The first primary Judge found that the letters between AH and AHCS (which constituted the letter agreements) “were a contrivance designed to try and sheet home some loss to AHCS” so that said loss could be set off against Mrs Kelly’s Entitlements Claim.
12	The first primary Judge found that by failing to pay Mrs Kelly’s entitlements it had taken adverse action against her, in which Mr Atanaskovic was knowingly involved and that AHCS and Mr Atanaskovic were jointly liable in respect of that category of adverse action.
13	Upon delivery of the liability judgment the first primary Judge made the following declaration (March Declaration) and orders (March Orders): 
THE COURT DECLARES THAT:
1.	The first and third respondents breached ss 90(2) and 323 of the Fair Work Act 2009 (Cth) by failing to pay the applicant her statutory and contractual entitlements.
THE COURT ORDERS THAT:
1.	The first and third respondents shall pay the sum of $130,427.84 to the applicant within 21 days, plus interest up to judgment.
2.	The first and third respondents shall pay general damages to the applicant in the sum of $30,000.
3.	The application as amended is otherwise dismissed.
4.	The cross-claim as amended is dismissed.
14	Despite order 3 of the March Orders, it was clear from the liability judgment that the parties sought to, and would, be heard separately in relation to the penalty and costs stage of proceedings (penalty/costs hearing).  At the delivery of the liability judgment, the first primary Judge reminded the parties that any application for costs was required (pursuant to the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules)) to be made within 28 days, by application to the Court.  His Honour indicated to the parties that the Court would expect to receive any application seeking penalty within that same period, but that an order to said effect would not be formally made.
15	On 28 April 2022, being the last date under the Rules to do so, Mrs Kelly filed an Application in a Proceeding seeking the imposition of penalties against AHCS and Mr Atanaskovic, and costs (penalty/costs application).  The penalty/costs application was given a return date of 13 May 2022 by the Registry.    
16	On 28 April 2022, the respondents filed an appeal from the liability judgment with the Federal Court of Australia (appeal).  While commenced (and styled) as an appeal by reference to the March Orders having ostensibly been made on a final basis, it was not in dispute between the parties that the intention of the first primary Judge was not properly reflected by order 3 of the March Orders.  Namely, the proceedings in this Court had not yet completed because the penalty/costs stage had not yet been heard and determined.  
17	On 10 May 2022, 12 days beyond the time provided for the making of an application for costs pursuant to r 22.02(1)(b) of the Rules, and three days before the penalty/costs application was to be first returned before the Court, the respondents also filed an Application in a Proceeding seeking orders that Mrs Kelly pay their costs in relation to part of the Adverse Action Claims (see [196] below) (respondents’ costs application).  Consequent upon that development, the parties agreed proposed orders for the exchange of written submissions in relation to the respective applications, and that the applications be listed for the penalty/costs hearing at a time convenient to the Court, but after 26 July 2022 (being upon the expiry of the proposed submissions regime).  Those proposed orders were sent to the Chambers of the first primary Judge for consideration on 12 May 2022. 
18	Later on 12 May 2022, the first primary Judge made the consent orders in Chambers.  In an email to the parties attaching the sealed consent orders that day, the Associate to the first primary Judge noted that the matter would be re-docketed, in contemplation of the first primary Judge’s impending retirement as a judge of this Court.  
19	On 13 May 2022, Mrs Kelly filed a cross-appeal in the Federal Court (cross-appeal).  
20	These proceedings were re-docketed to me on 15 June 2022, at which time my Chambers commenced a process of seeking to ascertain available dates from the parties for the penalty/costs hearing.  After several attempts to find consensus as to dates, the matter was ultimately heard by me on Monday, 24 October 2022, even though by fixing this date Mrs Kelly was denied the opportunity to be represented by the Counsel who had appeared for her at the liability hearings.  
21	At the commencement of the penalty/costs hearing, I made the following order and notation to address the issue discussed at [16] above: 
1.	Pursuant to r 17.05(2)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules), order 3 made on 31 March 2022 is set aside and, in lieu thereof an order be made in the following terms:
"3.The further amended statement of claim otherwise be dismissed, save for claims pertaining to the imposition of penalty/ies and issues of costs".
THE COURT NOTES THAT: 
For the purposes of order 1 above regard, the relevant intention of the Court is contained in paragraphs [262] and [302] of the reasons for judgment in Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 2) [2022] FedCFamC2G 112.
22	Between the date of the delivery of the liability judgment and the hearing of the penalty/costs applications before me, the following omissions are relevant to note: 
(a)	at no time was a stay of the March Orders sought from this Court;
(b)	at no time was a stay of the March Orders sought from the Federal Court in the appeal; and yet
(c)	the respondents did not comply with order 1 of the March Orders.  Namely, no sum was paid to Mrs Kelly within 21 days, or in fact at all, until payment was made to her on the Friday immediately preceding the penalty/costs hearing.    
23	In addition to the matters identified at [22(a)] and [22(b)] above, it should be noted that the respondents have also not sought that the appeal from the liability judgment be expedited and determined, prior to this Court proceeding to the penalty/costs stage.  
Material before the court
24	The following Affidavits were read by the parties at the penalty/costs hearing (without objection): 
(a)	for Mrs Kelly: 
(i)	Affidavit of Lauren Brouwer-French affirmed 28 April 2022 (first Brouwer-French Affidavit); and 
(iii)	Affidavit of Lauren Brouwer-French affirmed 7 September 2022 (second Brouwer-French Affidavit). 
(b)	for the respondents: 
(i)	Affidavit of John Ljubomir Atanaskovic sworn 21 October 2022 (first Atanaskovic Affidavit); and 
(ii)	Affidavit of John Ljubomir Atanaskovic sworn 24 October 2022 (second Atanaskovic Affidavit). 
25	In terms of the applications upon which the parties moved and were ultimately heard by me at the penalty/costs hearing: 
(a)	leave was required by the respondents to rely upon their costs application because it was filed out of time on 10 May 2022.  That leave was opposed by Mrs Kelly, albeit it was accepted for her that she was not prejudiced by its lateness.  I granted leave to the respondents to rely upon their costs application; and 
(b)	by the second Brouwer-French Affidavit, leave was sought by Mrs Kelly to rely upon a proposed Amended Application in a Proceeding annexed thereto.  The proposed Amended Application in a Proceeding sought that penalty by imposed on the respondents under the Long Service Leave Act (NSW) (LSL Act) for the contravention of s 4(5) thereof, consistent with the pleadings.  Leave was opposed by the respondents on the basis that the addition lacked utility.  On the basis that the respondents would be allowed to make submissions about the potential imposition of penalty under the LSL Act, I also granted leave to Mrs Kelly to file and rely upon her Amended Application in a Proceeding (amended penalty/costs application).   The amended penalty/costs application was subsequently filed in accordance with the Court’s orders on 25 October 2022.
26	Before the Court was also a 5-volume joint Court Book containing a selection of relevant documents filed throughout the proceedings and transcripts of certain hearings before the first primary Judge.  In respect of the latter, the respondents tendered pages 17 and 18 of the Transcript of hearing before the first primary Judge from 23 June 2021, which were received without objection and marked as Exhibit “1R”.
27	Pursuant to the timetable agreed between the parties and ordered by the first primary Judge, I also had before me the following written submissions filed in advance of the penalty/costs hearing: 
(a)	in relation to Mrs Kelly’s amended penalty/costs application: 
(i)	in-chief, filed for Mrs Kelly on 10 June 2022; 
(ii)	in-chief, filed for the respondents on 19 July 2022; 
(iii)	in reply, filed for Mrs Kelly on 7 September 2022; 
(iv)	in relation to proposed alternative LSL Act penalty, filed for the respondents on 23 September 2022; and 
(v)	in relation to proposed alternative LSL Act penalty, filed for Mrs Kelly on 7 October 2022.
(b)	in relation to the respondents’ costs application: 
(i)	in-chief, filed for the respondents on 10 June 2022; 
(ii)	in-chief, filed for Mrs Kelly on 8 July 2022; and
(iii)	in reply, filed for the respondents on 22 July 2022.
Preliminary issueS
28	Before turning to the issues of penalty and costs, it is necessary to first address two matters contended for by the respondents, arising from the circumstance of the Court having reconstituted between the liability and penalty/costs stages, consequent upon the retirement from this Court of the first primary Judge (see [18] above).  
29	The first issue is that the respondents have approached the issues of penalty/costs as an opportunity to seek to re-agitate or re-cast the first primary Judge’s factual findings and as a quasi-appeal from the liability judgment.  The second matter, being a subset of the first, is that much of what has been submitted for the respondents also seeks to minimise the import of central findings made by the first primary Judge.  Each of these positions seeks to exploit the unusual (but not unprecedented) situation created by reason of the Court now determining questions consequent upon the liability judgment, in circumstances where it was not the trier of fact.  
30	By reason of the respondents’ approach, which can best be described as attempting to “play the man, not the ball”, it is necessary to clarify the parameters of the task which now confronts this Court, and the import of the findings upon which the question of penalty is to be assessed.  
The task of the Court in determining penalty
31	As noted above, while the manner in which this matter now proceeds is out of the norm, it is by no means unprecedented.  
32	In Martinuzzi v Fair Work Ombudsman (2012) 205 FCR 106 (Martinuzzi), Logan J considered whether it was mandatory for the same Federal Magistrate to hear and determine both the liability and penalty stages of proceedings, brought in respect of alleged breaches of an industrial award.  Martinuzzi is relevantly indistinguishable from the present circumstances insofar as the first Federal Magistrate heard the liability stage of the proceedings and made declarations and orders in respect of contraventions he had found.  The first Federal Magistrate then made procedural orders for the later determination of the question of penalty in anticipation of his impending resignation, with the penalty and costs stage to be determined by a second Federal Magistrate.  
33	Despite the de novo/appellate approach urged upon this Court by the respondents, the decision of Martinuzzi is not discussed here because there was any challenge by either party to my jurisdiction to determine penalty/costs. Rather, it is relevant for what it reveals in obiter about the relevant stages involved in a litigation where civil pecuniary penalties arise upon the finding of relevant contraventions, because the respondents invite the Court (in a number of ways) to make alternate factual findings to those of the first primary Judge, or to entirely decline to impose penalties on the basis that his Honour allegedly failed to afford Mr Atanaskovic procedural fairness.  In this context it is necessary to consider the respective stages involved in such proceedings and how (if at all) they may impact the approach of a second judge undertaking a penalty/costs hearing, by reference to the exercise of judicial power by the first judge in determining liability.       
34	Judicial power has effect irrespective of the consent of those involved: see One Tree Community Service Inc v United Workers' Union (2021) 284 FCR 489 per Flick J at [26].  In Huddart, Parker & Company Pty Ltd v Moorehead (1909) 8 CLR 330 per Griffith CJ at 357 his Honour found that: 
…I am of opinion that the words ‘judicial power’ as used in sec. 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action.
35	With that in mind, the following principles emerge from Martinuzzi: 
(a)	by reference to the exercise of judicial power referred to in Huddart (supra), in the present case the relevant “tribunal” is this Court, being called upon to take action by the institution of the proceedings by Mrs Kelly against the respondents;
(b)	if a statute makes specific provision for the reconstitution of the Court following the death, illness, resignation, prolonged absence or other incapacity of a judge who has “part-heard” a case, that legislation will govern the substitution: Wentworth v Rogers (No 3) (1986) 6 NSWLR 642 per Kirby P (as his Honour then was) at 649 citing Chua Chee Chor v Chua Kim Yong [1963] 1 All ER 102;
(c)	the relevant statute, the (then) Federal Magistrates Act 1999 (Cth) (FM Act) was silent as to whether the Court was required to be constituted by the same Federal Magistrate throughout all stages of a proceeding.  Reference was made in Martinuzzi at [9] to s 8 of the FM Act which provided that the FMC was constituted by the Chief Federal Magistrate and such other Federal Magistrates as were from time to time commissioned.  That section is analogous to s 10(2) of the current Federal Circuit and Family Court of Australia Act 2021 (Cth) (Court Act).  Reference was also made by Logan J to s 11 of the FM Act which provided that the jurisdiction of the FMC was to be exercised by a single Federal Magistrate: Martinuzzi at [9].  Section 11 of the FM Act is also analogous to s 137(1) of the Court Act.  In addition to those analogues, the present Court Act is similarly silent as to the requirement that the same judge hear all stages of a proceeding; 
(d)	in the absence of prescription by the Court Act, if the requirement that the same judge preside throughout proceedings were to exist, it must be found by implication relating to the exercise of judicial power;
(e)	as at the date of the delivery of Martinuzzi, there was no authority for the proposition that the same judicial officer must, without exception, constitute the Court from the inception of a proceeding through all interlocutory stages, the trial (and by extension any ancillary or consequential hearings).  That position has not changed because of the decision in Martinuzzi nor, it seems, thereafter;
(f)	the primary rule is that once a court embarks upon the hearing of “the case” (which expression is generally understood to mean the substantive trial of fact (or part of a proceeding in which it might properly be regarded as being “part-heard”)), the Court as so constituted should conclude the hearing.  However, the rule is subject to the exception that “if an ancillary, severable and distinct matter is severed and not dealt with in an earlier proceeding, it may be determined by another judge”; and  
(g)	in some cases where the unavailability (for whatever reason) of the judge has arisen at a stage which is not so severable or distinct such that it is considered “part-heard”, it is usually necessary to explore the position of the parties as to whether they consent to the matter being continued by another judge (or the alternative courses if not).  Acquiescence can also suffice in the absence of express consent.
36	Next, the reasoning of Logan J in Martinuzzi at [17] warrants being set out in full (emphasis added): 
In the present case, there was a factual controversy … resolved by [the first Federal Magistrate], who also then construed and applied the Award to the facts which he found. That the appellants subsequently objected to the conclusion of the proceeding by [the second Federal Magistrate] did not, contrary to their submission, mandate that the whole proceeding had to be heard afresh. No “grave objection” of the kind mentioned in Brennan v Brennan was present because such evidentiary controversies as there were had already been resolved and declarations as to contraventions made by [the first Federal Magistrate] in his judgment. Subject only to the contingency of being set aside on appeal, those contravention declarations finally determined, as between the parties, whether or not the Award had been breached in the manner alleged by the Fair Work Ombudsman. They did not depend for their efficacy in law upon the subsequent determination by the Federal Magistrates Court, by whosoever constituted, of the penalties to be imposed or upon the making of any ancillary orders. No such result was expressly dictated by the FM Act. Nor was it implicit in the exercise of judicial power, as a matter of procedural fairness, that the same judicial officer determine penalty. Declarations as to contraventions already having been pronounced in open court, it would be subversive of the quality of finality which attends an exercise of judicial power for there to be anything provisional about those declarations, derived from a need for the subsequent continuance in office by the federal magistrate who had constituted the court for the purpose of deciding whether the contraventions had occurred.  
37	As was acknowledged by Logan J at [22] to [23] in Martinuzzi (emphasis added): 
Even though the case did not come before him by way of remitter following an appeal, [the second Federal Magistrate] was correct to conclude that the same position prevailed in the present case. So far as a civil penalty proceeding is concerned, there are always in prospect, on the institution of the proceeding, two distinct stages, determination of whether an alleged contravention is proved and, if so, what, if any, penalty and other relief, if sought, ought to be granted. Sometimes, of course, the first stage is rendered unnecessary by an admission of liability; sometimes the second is rendered unnecessary by a conclusion that the alleged contravention is not proved.
However desirable it may be that the same judicial officer constitutes the court for the purpose of determining both liability and penalty, this course is not mandated either by the terms of the FM Act or by implications flowing from a need that judicial power be exercised in a procedurally fair way. There are separate, distinct stages in the proceeding. The present is but a manifestation of the exception, described in the third of the propositions stated by Kirby P in Wentworth v Rogers (No 3) in the passage quoted above and to like effect by Martin CJ in O’Brien v Macskimin in the passage to which I have given emphasis. That there could be no objection, after the death of one judicial officer, to another judicial officer dealing with a distinct stage in a proceeding was recognised by Dixon J in Orr v Holmes (1948) 76 CLR 632 at 637-638. The position with respect to supervening retirement or resignation is no different.
38	These proceedings are not “part-heard” in the sense in which that term is usually understood.  The liability judgment of the first primary Judge is a separate, distinct, and final exercise of judicial authority on his Honour’s part in respect of the matters with which it deals.  The penalty and costs stage is not an appeal from the liability judgment.  It is a well-established principle (at least within the context of the granting of a stay pending appeal), that a judgment appealed from is assumed to be correct: see The Annot Lyle (1886) 11 PD 114 at 116; Monk v Bantram [1891] 1 QB 346 and Esco Corp v PAC Mining Pty Ltd [2008] FCA 1018 per Tamberlin J at [19].  To the extent that Martinuzzi (supra) at [17] refers to the contingency of declarations of contravention being set aside on appeal, this is to be understood by reference to the fact that final orders are not provisional until confirmed on appeal: see Commonwealth Bank of Australian v Barker [2012] FCA 1076 per Besanko J at [20].  I see no relevant distinction in terms of how this Court should approach the liability judgment, absent the application for leave to appeal having been determined.  The liability judgment should be treated as being correct, and the declarations as being final. 
39	The first primary Judge having completed the liability stage of these proceedings by delivery of the liability judgment, together with the making of the declaration and consequential orders, this Court should, and will, proceed to determine penalty and costs on the basis of the factual findings contained within the liability judgment.  Any other course, including by entertaining the making of alternate findings of fact, would be inappropriate.     
40	Turning then to the first issue described at [29] above, the respondents contend that Mr Atanaskovic was denied procedural fairness by the first primary Judge because Mrs Kelly failed to fully plead an accessorial liability claim against (relevantly) Mr Atanaskovic.  Mr Atanaskovic says Mrs Kelly’s express failure to plead has important consequences because I should now accept that while the first primary Judge made findings of contravention, his Honour did not contemplate them as being final in respect of any application by Mrs Kelly for penalty.  
41	In support of that submission, the respondents rely upon the interlocutory judgment delivered by the first primary Judge on 11 March 2021: see Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd [2021] FCCA 552 (interlocutory judgment).  The respondents contend that findings in relation to the contraventions (in which Mr Atanaskovic was found to be involved/an accessory within the meaning of s 550 of the Act), remain open to this Court to make for itself (despite this not being a course they now actively pursue).  
42	Instead, the respondents say because of the alleged denial of procedural fairness to Mr Atanaskovic that, rather than making new findings, the Court should simply not impose any penalty on him.  It was submitted that the Court could also not rely upon the findings of the first primary Judge in imposing a penalty against AHCS, for the same reasons. 
43	The interlocutory judgment relied upon by the respondents in support of this proposition is brief and can be summarised as follows.  Once evidence had closed in the liability stage of the proceedings, Mrs Kelly made a formal application to amend her Further Amended Statement of Claim to formalise the question of accessorial liability against the individual respondents.  After making observations that this Court is not generally a court of pleadings, and summarising the nature of the claims (in a manner which was consistent with the later liability judgment) his Honour found as follows at [7] to [8] (emphasis added): 
Another part, and perhaps an important part, of Ms Kelly’s claim relates to alleged adverse action for a prohibited reason, in respect of which she claims compensation. There are, as has been pointed out, seven respondents in the proceedings, and it has been pressed upon me that the case always carried within it the proposition that both the first respondent (service company) and the individual respondents are said to be liable to pay compensation, either as principals or as accessories.
To the extent that the amendments now proposed are considered unnecessary, but are put forward on a precautionary basis, then, in my view, the leave sought is not required. The Court has, as I have noted, taken a liberal attitude to the drafting of pleadings, and I have myself had cause to express some frustration with demands for different pleadings on the basis of perceived technical defects. To the extent that the respondents see the present application as one potentially depriving them of technical drafting objections, that expectation may well be disappointed even if the Application in a Case fails.
44	As noted, the respondents contend that this Court should now re-determine certain facts for itself or entirely decline to impose penalty against Mr Atanaskovic.  It is submitted for the respondents that if the Court were to:
…nonetheless contemplate a penalty against Mr Atanaskovic, then the court should approach the matter on the basis that the findings made by [the first primary Judge] against Mr Atanaskovic were made in the context of him not having been afforded procedural fairness.
45	The respondents have not sought to formally re-open their case.  Also, despite the suggestion that Mr Atanaskovic ought to be wholly protected from exposure to penalty as a result of matters which are suggested could be the subject of further evidence, such evidence was not forthcoming.  Mr Atanaskovic says that even if he were now provided with the opportunity to adduce further evidence this would not cure the inevitable prejudice to him, citing Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (Bay Street Appeal) (2020) 282 FCR 1 (Bay Street Appeal) per White J at [222] and [239] to [241].  The respondents say that the Bay Street Appeal stands, inter alia, for the proposition that even if Mrs Kelly were now permitted to amend in the manner which became the subject of the interlocutory judgment, it would be unrealistic to recall witnesses, and therefore this weighs heavily against permitting Mrs Kelly to so amend.  
46	To the extent that the respondents contend that there was a failure by Mrs Kelly to plead all the elements of the contraventions which were found, such that it was not open to the first primary Judge to reach the conclusions he did, the interlocutory judgment found to the contrary and that is not a matter this Court ought re-open on penalty.  It should be observed that Mrs Kelly has not in fact sought to amend again, relying naturally enough on the outcome of the interlocutory judgment by which she says the first primary Judge found that such an amendment was unnecessary, and upon the liability judgment by which his Honour found there to be contraventions of the Act by AHCS and involving Mr Atanaskovic.  
47	The respondents’ submission in this regard also highlights the conveniently defeatist nature of their position.  The respondents raise what they say is a fundamental difficulty for them, but simultaneously say there is no possible solution to it other than for the Court to simply decline to impose penalty.  
48	Further, and as noted above at [23], the respondents have not sought to have their (application for leave to) appeal determined before penalty, which was arguably a course available to them.  Instead, the respondents ask that Mr Atanaskovic entirely avoid penalty as some form of recompense for alleged procedural unfairness.  This is not an appropriate course, in particular because it would involve this Court having to consider and determine whether the first primary Judge denied the respondents procedural fairness.  Again, the penalty stage of proceedings is not an appeal from the liability judgment and in any event this Court has no appellate jurisdiction of its own: see BKW17 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 1 per Allsop CJ, Burley and O’Callaghan JJ at [26].  
49	It was also asserted for the respondents that, until now, these proceedings were not penalty proceedings, such that they (or more specifically Mr Atanaskovic) were taken by surprise as to the first primary Judge’s findings of accessorial liability which now render Mr Atanaskovic exposed to penalty. I reject that proposition.  Mrs Kelly says that these proceedings have patently been penalty proceedings from their inception because penalty proceedings involve, first and foremost, an allegation that there has been a contravention of an Act of Parliament and that while the remedy sought is in the nature of a penalty, the primary stage for determination is whether there has been a contravention.  I agree. 
50	To the extent that the respondents, but in particular Mr Atanaskovic, suggest that the liability judgment is unsafe because his accessorial liability was never in issue, again it is not for me to make that assessment for itself.  Given that in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298 where at [63] to [65] their Honours Logan, Bromberg and Katzmann JJ held that:
…a civil proceeding of a penal nature, a statement of claim must allege a contravention known to law and with a sufficient statement of material facts to alert a respondent to the case to be met…
then whether it was open to first primary Judge to find the contraventions will also be an issue for the appeal, if raised.   
51	For the purposes of this Court now proceeding to determine penalty, it is sufficient to observe that the first primary Judge clearly took the view that the pleadings sufficiently alerted the respondents to the case they must meet on the question of accessorial liability in respect (specifically) of the Entitlements Claim.  This is so by reference to the interlocutory judgment, in which the first primary Judge expressed the view that it was unnecessary to further elucidate the issue of accessorial liability beyond the existing pleading.  His Honour went on to observe that: 
The respondents deny that they were accessories to the alleged contraventions in respect of the Entitlements Claim or the Adverse Action Claims.
so clearly the respondents were on sufficient notice of the issue to expressly deny it.  
52	In respect of this issue, and any other aspect of the respondents’ submissions which invited the Court to stray from the findings of the first primary Judge made in the liability stage of proceedings (and specifically by either of the interlocutory or the liability judgments), I decline to do so.  
The nature of the liability findings
53	Respectfully, the liability judgment delivered by the first primary Judge was plain and unequivocal in its terms.  Despite this, the respondents do not appear to have fully grasped its import.  By reference to many of the submissions advanced for them, one could be forgiven for thinking that the respondents had read a different liability judgment.   
54	Mrs Kelly’s submissions on penalty were premised, inter alia, on the basis that the liability judgment carried with it elements of scheming and deceit in the conduct of the respondents.  The respondents, by their submissions, expressed a level of astonishment at those contentions and cavilled with the liability judgment, including by saying that there was no such aspect to his Honour’s findings.  
55	Specifically, at the penalty/costs hearing the following submission was made by King’s Counsel for the respondents: 
The court is asked to approach the question of penalties by my learned friends on the basis that Mr Atanaskovic, Mr Sophocles and Mr Hartnell implemented an elaborate plan which was the brain child of Mr Atanaskovic to manufacture a cross-claim so as to circumvent AHCS’s statutory obligation to pay her entitlements. Those submissions are found at paragraphs 2, 27 and 32 of the applicant’s submissions. And that also, they say at paragraph 44, there was a deliberate creation of an elaborate contrivance to create a cross-claim. Now, that, your Honour, is putting nothing short of a case of fraud and dishonesty against senior practitioners. Now, quite aside from penalties or anything else, your Honour would be well aware that, before any part can make such serious allegations, they need to be pleaded. And they need to be pleaded with specificity and clear notice must be given of such a case. Now, your Honour should not assume that [the first primary Judge’s] findings amount to such a case. [The first primary Judge] would never have contemplated making serious findings of fraud or dishonesty against those three senior practitioners in the absence of procedural fairness.
56	As discussed, it is not for this Court to re-make the findings of the first primary Judge.  However, to the extent the respondents suggest there is scope for interpretation of findings central to the liability judgment and the factors going towards my exercise of discretion in relation to penalty, it is important that their meaning is clear.  
57	By reference to the findings which are summarised at [7] to [12] above, the crucial expressions used by his Honour are “contrivance” and “artifice”.  The first primary Judge did not expand upon those terms and I infer that his Honour intended that they carry their ordinary meaning.  
58	The following definitions are derived from the Oxford English Dictionary:
(a)	contrivance is defined as:
The action of contriving or ingeniously endeavouring the accomplishment of anything; the bringing to pass by planning, scheming, or stratagem; manoeuvring, plotting; deceitful practice.
(b)	artifice is defined (applying its usual sense) as: 
a. Skill in devising and using expedients; artfulness, cunning, trickery.
b. An ingenious expedient, a clever stratagem; (chiefly in negative sense) a manoeuvre or device intended to deceive, a trick.
59	With the addition of the verbs: 
(a)	“constructed” in relation to the contractual artifice; and 
(b)	that the board minutes, being plainly being wrong, were described as having been “designed to give false credence”; 
it is sufficiently clear that the first primary Judge was, indeed, conveying an element of scheming and deception in the findings his Honour made about the conduct of the respondents.  
60	This is particularly so in relation to the first and third respondents, given the following findings of the first primary Judge at [259] to [261] of the liability judgment (emphasis added): 
For those reasons, AHCS has taken adverse action against Mrs Kelly in which Mr Atanaskovic was knowingly involved. Accordingly, AHCS and Mr Atanaskovic are jointly liable in respect of that category of adverse action.
In my view, it is abundantly clear that the scheme for the non payment of Mrs Kelly’s Entitlements and for the pursuit of the cross-claim against her as a means of avoiding payment of those Entitlements was the brainchild of Mr Atanaskovic. It was he who persuaded the then directors of AHCS to take the course of action that they did. It does not matter that he was not at the time a director himself. It is not necessary to resolve the question of whether he acted as a shadow director. Mr Atanaskovic was the managing partner of AH, and it (and AH LLP) were the only clients of AHCS. As the controlling mind of the only client of AHCS, and by reason of his own force of will, Mr Atanaskovic was in a position to control the actions of AHCS and did so.
I find, therefore, that both AHCS and Mr Atanaskovic took unlawful adverse action against Mrs Kelly by failing to pay her Entitlements.
61	Next, the respondents say that to the extent that Mrs Kelly contends there existed a “plan” on their part, the first primary Judge made no finding of a plan at all.  I reject that assertion.  Aside from the definition of contrivance, his Honour referred in the paragraphs set out immediately above (but in particular at [260] of the liability judgment) to the existence of a “scheme” for the non-payment of Mrs Kelly’s entitlements.  It is sufficiently clear that whether it be described as a “plan” or a “scheme”, that finding was made in substance. 
62	The respondents, in seeking to resist the imposition of any penalty on AHCS say that Mrs Kelly is trying to tarnish AHCS, or attribute to it the conduct of Mr Atanaskovic which is said to ground the imposition of penalties against him personally.  The respondents say that the liability judgment does not identify any conduct on the part of Mr Atanaskovic which can be attributed to AHCS.  I also reject this contention on the basis of, inter alia, the findings at [259] to [261] of the liability judgment.  
63	The suggestion that it was not open to the first primary Judge to find as he did that the letter agreements were part of a scheme, a contrivance, a construction and/or an artifice based on the evidence as it emerged at the hearing before him, because Mrs Kelly did not plead this or for any other reason, is also rejected.  As noted earlier, contentions in that regard, and any allegations of procedural fairness remain within the ambit of the Federal Court appeal, should the respondents wish to agitate them.  
64	The relevant findings of the first primary Judge which will lay the foundation upon which this Court must now approach penalty, unequivocally convey the existence of a scheme (conceived of by Mr Atanaskovic and implemented by AHCS), which included elements of deceit carrying with it the very connotation of dishonesty which the respondents now seek to suggest are outlandish.  
Penalty
65	By her amended penalty/costs application, Mrs Kelly seeks the imposition of civil pecuniary penalties against AHCS and Mr Atanaskovic for contraventions of the Act, found by the first primary Judge.    
66	Specifically, Mrs Kelly seeks an order that AHCS and Mr Atanaskovic pay civil pecuniary penalties, pursuant to s 546(1) and (3) of the Act, in relation to AHCS’ contraventions of 
s 44(1) (by reason of their contravention of ss 90(2)) and 323(1) of the Act), and Mr Atanaskovic’s involvement in them.  
67	I accept that Mrs Kelly has standing to seek such orders pursuant to s 539(2) of the Act and note that she seeks that any penalties imposed on the respondents be paid to her, pursuant to 
s 546(3) of the Act.  
68	Section 323(1) is a civil remedy provision of the Act for which the Court may order a pecuniary penalty.  Section 90(2) of the Act is part of the National Employment Standards in respect of which s 44(1) of the Act provides that “an employer must not contravene a provision of the National Employment Standards”, such that a breach of s 90(2) of the Act necessarily constitutes a breach of s 44(1) of the Act.  Section 44(1) of the Act is also a civil remedy provision of the Act, for which the Court may order a pecuniary penalty.
The approach to penalty
69	The parties were largely agreed in respect of the approach which should be taken to assessing penalties, including for multiple contraventions of the Act, albeit they each contended for a different outcome.   
70	The parties each made reference to the accepted approach to assessment of penalty involving multiple contraventions, which are helpfully set out in Fair Work Ombudsman v NSH North Pty Ltd (t/as New Shanghai Charlestown) (2017) 275 IR 148 (New Shanghai) per Bromwich J at [36] as involving the following five step process:
(a)	identifying the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention; 
(b)	considering whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person; 
(c)	considering 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)	considering the appropriate penalty in respect of each final individual group of contraventions, taken in isolation; and
(e)	considering the overall penalties arrived at, including what is proposed by the respective parties, and apply the totality principle 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: see Kelly v Fitzpatrick (2007) 166 IR 14 (Kelly v Fitzpatrick) at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [23], [71] and [102].
71	The Court’s discretion as to penalty is unfettered.  
72	The respondents emphasise that the Court is not required to impose a penalty simply because contraventions have been found: see Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corp Ltd [2007] FCA 1607 (CEPU v Telstra) per Gordon J at [13] citing Victoria University of Technology v Australian Education Union (1999) 91 IR 96 per Ryan, Branson and Finkelstein JJ at [33].  
73	However, for reasons which will be detailed below, the circumstances of the present case are different than those confronting the Court in CEPU v Telstra in which her Honour Gordon J observed at [18] that: 
Where the unlawful conduct arises out of an arguable but erroneous construction of a relevant term, and the subsequent breach cannot be characterised as demonstrating a flagrant or wilful disregard for the agreement, this legislative purpose is not furthered by imposition of a penalty. In these circumstances, neither general nor specific deterrence is a significant factor weighing in favour of imposing a penalty.
74	There are a number of cases which offer guidance as to relevant factors which may arise for consideration by the Court in its discretion to impose civil pecuniary penalties: see Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (CSR) per French J (as his Honour then was) and Kelly v Fitzpatrick (supra) per Tracey J at [14].  However, as has often been observed, and most recently reiterated in Australian Building and Construction Commissioner v Pattinson (2022) 175 ALD 383 (Pattinson), the Court’s discretion is not to be exercised by consideration of any mandatory checklist.  Nonetheless, a number of factors commonly arise for consideration.  Having regard to the liability judgment, I am of the view that the factors relevant to this case are: 
(a)	the nature and extent of the conduct which led to the contraventions;
(b)	the circumstances in which that conduct took place;
(c)	whether or not the breaches were deliberate;
(d)	the size and nature of the business enterprise involved and the involvement of senior management;
(e)	whether there has been previous similar conduct by the respondents and whether the company has a corporate culture conducive to compliance;
(f)	whether the party/ies who committed the contravention have exhibited contrition;
(g)	whether the party/ies committing the contravention have taken corrective action; and
(h)	the need for specific and general deterrence.
75	In considering the above factors, I have had regard to the following principles arising from Pattinson, upon which the parties made submissions, and which were recently distilled in Minister for Environment v Northern Seafoods Pty Ltd [2022] FCA 656 per Stewart J at [49]: 
(1)  The purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the relevant statute by the deterrence of further contraventions of the statute: [9] and [15];
(2)  “Insistence upon the deterrent quality of a penalty should be balanced by insistence that it ‘not be so high as to be oppressive’. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression” (citing NW Frozen Foods at 293): [40];
(3)  It is incorrect to set a penalty with reference to what is proportionate to the seriousness of the conduct that constituted the contravention: [10];
(4)  The penalty should be “proportionate” in the sense that it strikes a reasonable balance between deterrence and oppressive severity: [41];
(5)  It is incorrect to view the maximum penalty as being reserved for only the most serious examples of offending conduct; what is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed” (citing ACCC v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [156] per Jagot, Yates and Bromwich JJ): [10];
(6)  The object of imposing a penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the statute: [15];
(7) “Retribution, denunciation and rehabilitation have no part to play” (citing Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (Non‐Indemnification Personal Payment Case) [2018] FCAFC 97; 264 FCR 155 at [19] per Allsop CJ, White and O’Callaghan JJ): [16];
(8)  A civil penalty “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business” (citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at [62] per Keane CJ, Finn and Gilmour JJ): [17];
…
Identification, aggregation and adjustment of contraventions
76	The respondents’ primary position is that no penalty ought be imposed on Mr Atanaskovic, to ameliorate the alleged procedural fairness issue which I addressed at the outset of this judgment.  Similarly, it is contended for the respondents that AHCS ought also be held safe from penalty on the basis that it cannot be held responsible for the actions of Mr Atanaskovic.  For the reasons already outlined above in declining to depart from the factual findings of the first primary Judge, these propositions cannot be acceded to.  The task of this Court is to assess the question of penalty based on the factual landscape cast by the liability judgment and I do so based on the assumption that the first primary Judge’s findings are correct.   
77	Notwithstanding the respondents’ formal reservation as to the soundness of the liability judgment as discussed earlier, and that the March Declaration was expressed singularly in respect of Mrs Kelly’s unpaid entitlements, the parties agreed that the contraventions that are the subject of the liability judgment can be categorised as follows and discussion of them below will be by reference to the number assigned in the left hand column: 
No.	Fair Work Act section	Contravention	Maximum penalty AHCS
300 penalty units	Maximum penalty                Mr Atanaskovic 
60 penalty units
	
1	s 44(1) by reference to s 90(2)	Failure to pay Mrs Kelly accrued unused annual leave entitlements on cessation of employment	$54,000	$10,800	
2	s 323	Failure to pay Mrs Kelly long service leave entitlements in full without deduction 	$54,000	$10,800	
3	s 323	Failure to pay Mrs Kelly unpaid wages in full without deduction (contractual)	$54,000	$10,800	
4	s 323	Failure to pay Mrs Kelly unused annual leave entitlement in full without deduction	$54,000	$10,800	
78	The potential maximum penalty for each contravention is also not in dispute.
79	For Mrs Kelly it is contended that there ought not be any aggregation of the contraventions, but rather that each should be assessed individually.  In particular, in respect of the three contraventions of  s 323 of the Act (contraventions 2, 3 and 4), Mrs Kelly says that notwithstanding that the contraventions arise from the same statutory provision, each was a contravention of a different kind, and they are not so closely related as to warrant being grouped.  
80	Similarly in respect of the failure to pay Mrs Kelly her annual leave entitlements (contraventions 1 and 4), it is contended that each failure was conceptually different because the first is a breach of s 44(1) (by virtue of being a contravention of s 90(2) of the Act) relating to the failure to pay her at the conclusion of employment, as distinct from the contravention under s 323 of the Act for failing to pay the amount in full without any deduction, including by reference to the alleged set-off asserted by the respondents.  
81	In respect of contraventions 1 and 4 the respondents say that the effect of treating these contraventions separately would result in AHCS being punished twice for the same conduct because, even though the effect of s 557 of the Act does not compel the grouping of the s 44 contravention with the s 323 contraventions, the factual circumstances that gave rise contraventions 1 and 4 were the same and so they should also be treated as constituting a single contravention. 
82	In respect of contraventions 2 to 4 (inclusive), the respondents submitted: 
AHCS made a single decision not to pay the entitlements in reliance on an equitable right of set-off arising from the cross claims it made against the applicant in these proceedings.
83	The respondents say that the conduct which gave rise to the three contraventions of s 323 of the Act was the same, and the Court should conclude that they are therefore a single course of conduct.  
84	The respondents now assert a single decision on the part of AHCS to not pay Mrs Kelly various entitlements upon her resignation because it relied on an alleged equitable right of set-off.  I reject that contention.  Firstly, there is no finding on the part of the first primary Judge that there was such a single decision.  Secondly, and to the contrary, what the first primary Judge did find was that the unmeritorious cross-claims were brought by the respondents simply and solely to defeat Mrs Kelly’s Entitlements Claim in these proceedings and were “only raised when Mrs Kelly sought to be paid her Entitlements”.
85	The first primary Judge also found that the letter agreements between AH and AHCS were a contractual artifice designed to shift loss from AH to AHCS so that AHCS could allegedly set-off damages against Mrs Kelly’s entitlements and a contrivance.
86	It is open to infer, and I do, that rather than withholding Mrs Kelly’s entitlements based on a single, temporal decision (grounded by a genuine belief that an equitable set-off was already extant) AHCS, with Mr Atanaskovic as its controlling mind, determined that AHCS would not pay Mrs Kelly her entitlements and later contrived a way to avoid doing so.
87	The conduct which was said to give rise to the cross-claims had occurred many years before Mrs Kelly’s resignation, the subsequent withholding of her entitlements and the much later execution of the letter agreements.  The first primary Judge found that if the cross-claims had been genuinely intended to recover damages from Mrs Kelly based on her liability for losses then: 
(a)	AHCS would have terminated Mrs Kelly’s employment at the relevant time; and 
(b)	the persons who actually suffered the alleged loss (being the partners of AH), would have brought a claim against her.   
88	The first primary Judge expressly found that it was Mrs Kelly bringing the “Entitlements Claim…which stimulated the cross-claim”.  
89	Based on the findings of the first primary Judge there is no proverbial “chicken and egg” scenario arising between the respondents’ refusal to pay Mrs Kelly her entitlements and the alleged equitable set-off.  Accordingly, I do not accept as a matter of fact that there was a single decision taken by AHCS to withhold Mrs Kelly’s entitlements.  
90	However, even if it was a single decision, that would not necessarily assist the respondents in pursuit of the aggregation for which they contend.  In Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 (FWO v Ramsey Food) Buchanan J, considering s 719(2) of the Workplace Relations Act 1996 (Cth) (being the predecessor to s 557 of the Act), said the following at [1] to [2] (emphasis added): 
…The breaches involved failures to make certain payments to employees at the time their employment was terminated. It is obvious from the terms of my earlier findings that the breaches were, in my view, serious and intentional.
Eleven employees were involved. Ten of those employees had not been provided with the required notice of termination of employment. Ten employees had not been paid severance pay as required. Eight employees had not been paid accrued annual leave on termination of employment as required. The applicant has contended therefore that there were 28 identifiable breaches of obligations arising directly or indirectly under the WR Act and that a penalty should be fixed for each one and imposed on each of the respondents. However, s 719(2) of the WR Act provides that where two or more breaches of an “applicable provision” under the WR Act, which includes a term of an award, arise out of the same course of conduct, they are to be treated as a single breach. On one view, the failure to make any of the required payments arose from a single course of conduct. They all arose from a determination by the respondents that no payment would be made upon the termination of employment of any of the employees, or the employees as a group. However, this approach gives insufficient attention to the separate legal character of the three forms of obligation earlier identified. I am satisfied that each of those forms of obligation requires separate recognition. 
91	The decision of FWO v Ramsey Food was cited with approval by the Full Federal Court in Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 (Rocky Holdings) at [18] per North, Flick and Jagot JJ when considering antecedent provisions to s 557.  
92	Consistent with FWO v Ramsey Food and Rocky Holdings (as reiterated in Stratton Finance Pty Limited v Webb (2014) 314 ALR 166), in the present case, I reject the proposition that the failure of AHCS to pay Mrs Kelly each of her annual leave, long service leave and salary entitlements upon her resignation should be treated as a single group of contraventions such that they fall for consideration of a single penalty.  
93	Each of those entitlements was a separate offence for the purposes of s 323 of the Act and a contravention of a different kind.  The obligation to pay Mrs Kelly her wages arose from her contract of employment.  Mrs Kelly’s statutory entitlements arose from s 4 of the LSL Act which falls within the ambit of ss 323 and 90(2) of the Act in respect of Mrs Kelly’s accrued annual leave entitlements.  I accept the submission made for Mrs Kelly that these individual contraventions (2, 3 and 4) should not be taken to constitute a single contravention.  
94	In respect of whether contraventions 1 and 4 should be aggregated, while there is a distinction between the obligations to pay Mrs Kelly her annual leave at the conclusion of employment as against whether AHCS had any right to withhold or deduct part of that payment (including by reason of the alleged set-off) I accept the respondents’ submission that contraventions 1 and 4 (each of which arises from the total failure to pay Mrs Kelly her annual leave entitlements) should be aggregated such that they are taken to constitute a single contravention in respect of those failures.
Nature and extent of the conduct 
95	By failing to pay Mrs Kelly’s entitlements upon her resignation and the cessation of employment, AHCS was found to have taken adverse action against Mrs Kelly and Mr Atanaskovic was found to have been knowingly involved in, and an accessory to, those contraventions for the purposes of s 550 of the Act because the cross-claims were his idea and were pursued on his instructions.
96	In respect of the nature of that conduct, Mrs Kelly submits to the Court that this is an “extraordinary case”.  That is said to be not only because, as a departing employee, AHCS deliberately did not pay her statutory and contractual entitlements, but also because the managing partner of AH, Mr Atanaskovic used AHCS (acting by its (then) directors, Messrs Hartnell and Sophocles) to implement “an elaborate plan” designed to circumvent AHCS’s statutory obligations under the Act.  Mrs Kelly says that Mr Atanaskovic, as AHCS’ controlling mind, was the architect of that elaborate plan.  
97	Attention is also drawn by Mrs Kelly’s submissions to the fact that each of Messrs Atanaskovic, Hartnell and Sophocles are senior legal practitioners.
98	In reply, the respondents characterise Mrs Kelly’s submissions as being “emotively charged” and cavil with the characterisation of there having been an elaborate plan to deprive Mrs Kelly of her entitlements upon the cessation of her employment.  
99	While it is true that the term “elaborate” is not a feature of the reasons of the first primary Judge, by reference to the language of the liability judgment his Honour did find there to be a scheme constructed to falsely ground the cross-claims solely in order to defeat Mrs Kelly’s Entitlements Claim.  
100	Mrs Kelly says that scheme involved three parts.  The first was the making of allegations against Mrs Kelly that she had breached her contractual obligations by the conduct alleged to have given rise to the visa and LexisNexis cross-claims.  The second part of the scheme was to attempt to shift the loss from AH to AHCS, the latter being Mrs Kelly’s employer, in an effort to create damage on the part of AHCS by the contrived letter agreements.  The third part of the scheme involved the bringing of the actual cross-claims as a result of parts 1 and 2 of the scheme.  This description is factually accurate by reference to the findings of the first primary Judge.  
101	Whether constituting an “elaborate” plan or not, it is apposite to say that this was a conscious strategy, and was extraordinary.  That is particularly so given the relevant contextual factor that the scheme was conceived, acceded to and executed by senior legal practitioners who had responsibility for, and (to varying degrees) control of, AHCS.  
102	I also take into account that the total amount withheld from Mrs Kelly for a period of five years was not inconsiderable, namely $130,427.84.  Ultimately the payment of interest was ordered which provides a measure of additional compensation for the period in which Mrs Kelly did not have access to that sum.  However, against the full facts and circumstances of the present case, the sum of which Mrs Kelly was deprived was significant (and would be monumental to many), and that deprivation endured for a long period of time:  see Stratton (supra) at [54].
The circumstances of the conduct
103	As the first primary Judge found, AHCS did not terminate Mrs Kelly’s employment based on either of the matters which were said to give rise to the cross-claims, and which had occurred many years before.  
104	Upon Mrs Kelly asserting her rights in respect of the entitlements in late 2016 the respondents doubled-down by filing the cross-claims.  It was not until later, in 2018, that the letter agreements were purportedly entered into so as to underpin the cross-claims and attempt to shift loss to AHCS. 
105	The conduct referred to in the preceding paragraphs was not an inadvertent failure.  The liability judgment makes clear that the conduct was wilful and deliberate (see also [111] to [114] below).  
106	From the liability judgment, it is difficult to discern any basis upon which AHCS instituted the cross-claims other than Mr Atanaskovic’s own personal animus towards Mrs Kelly (expressly found to be extant).  The first primary Judge found that, until Mrs Kelly’s departure from AHCS which occurred after she served out her requisite notice period, she was well regarded by AHCS, reflected by the later findings in the liability judgment that: 
Notwithstanding the building storm of criticism of Mrs Kelly by Mr Atanaskovic, she remained a valued employee of AHCS. Notwithstanding Mr Atanaskovic’s repeated threats to her employment and to her salary, neither was she dismissed nor was her salary reduced. It appears to me that if she had not resigned, Mrs Kelly’s employment would have continued. Indeed, the evidence is clear that the resignation of Mrs Kelly caused some consternation to both AHCS and AH. They informally invited Mrs Kelly to remain in her position, at least on a limited part time basis, but she would have none of it.
107	The liability judgment indicates that it was only Mr Atanaskovic who bore ill-will towards Mrs Kelly. Mr Atanaskovic was in a position to control the actions of AHCS and did so.  AHCS was also found to have not acted reasonably in accepting liability for the losses which were the subject of the contrived letter agreements.  It was in these circumstances that AHCS breached its obligations to her and Mr Atanaskovic was found to be involved, within the meaning of s 550 of the Act. 
108	Further, it is relevant to consider that the contravening conduct continued for more than five years, from Mrs Kelly’s resignation on 5 August 2016 until 31 March 2022 being the date on which the liability judgment was delivered and the March Declaration and March Orders made, and beyond.  As will be detailed below in relation to corrective action, the respondents also failed to comply with the March Orders until immediately before the penalty/costs hearing.  
109	The cumulative circumstances of this case and the nature of the conduct in question are extremely serious and, as will be considered in relation to both general and specific deterrence, a regrettable set of actions on the part of any employer, but somewhat moreso in the field of legal practice. 
110	I find that the nature, conduct and circumstances of the contraventions to be sufficiently serious as to weigh in favour of a significant penalty being set.  
Whether or not the breaches were deliberate
111	It was suggested for the respondents, relying on CEPU v Telstra that the cross-claims were brought in good faith and that, notwithstanding they were unsuccessful, that they should be construed as having been arguable.  The respondents submit that the contraventions constituted by AHCS failing to pay Mrs Kelly her entitlements were not a flagrant or wilful disregard of AHCS’ obligations.  In light of the findings of the first primary Judge of the contractual artifice contrived by AHCS and Mr Atanaskovic, that submission must be rejected.  As the first primary Judge found, AHCS did not act reasonably in accepting liability for the losses which were the subject of the contrived letter agreements. 
112	The conduct of AHCS (with Mr Atanaskovic as its controlling mind) which gave rise to the contraventions as found by the first primary Judge, means it is not open to entertain that conduct as being anything other than wilful, conscious and deliberate.  
113	Given the elements of falsehood which are conveyed by the first primary Judge’s use of the terms “contrivance” and “artifice”, and the fact that his Honour found that Board minutes had been produced to give “false credence” to their incorrect content, there was not only a consciousness to these deliberate contraventions, but an intention to resist legal obligations, even if by means of deceit.  AHCS’ contraventions, in which Mr Atanaskovic was involved, were not only a deliberate and wholesale withholding of Mrs Kelly’s entitlements but reflected a dogged resistance in evading AHCS’ legal obligations, by the cross-claims and the scheme which underpinned them.  
114	Such blatant, wilful and contumelious conduct ought not occur in any employment context and weighs strongly in favour of the imposition of meaningful penalty.
Size and nature of the contravenor/s and involvement of senior management
115	The size and nature of the contravenors is another relevant factor in the present case.  
116	As set out in the liability judgment and at [2] above, AHCS is the service company for the law firm AH.  Mr Atanaskovic has been the sole director of AHCS since 7 January 2020, albeit even when he was not the only director of AHCS, to all intents and purposes he had total discretion in respect of AHCS’ affairs.
117	As the service company for a law firm, it may be reasonable to assume that AHCS’ size and nature is relative to the scope of services it provides to AH.  However, there is no material before the Court in that regard, nor to indicate how many other employees are presently in its employ, albeit it was submitted for the respondents’ that it is “a small proprietary company”.  There is recent evidence filed by Mr Atanaskovic which says that AH is dwindling in partner numbers, but no material which directly informs the size of AHCS.  There is also no specific evidence before me to as to the revenue or profit of AHCS or AH, nor in respect of Mr Atanaskovic’s personal financial circumstances.  The height of what is advanced is a statement by Mr Atanaskovic by his second Affidavit that: 
…AH reduced in size from five partners to two partners from early November 2016, and its revenues have reduced in about the same proportion over that time…
118	Even if it is open to accept that AH is not a particularly large law firm in terms of partner numbers, this does not necessarily equate to modest profitability, or provide any context to the alleged correlative reduction in revenue (noting that there is also no benchmark supplied against which a reduction of “about the same proportion” could be assessed).  The evidence which has been advanced is wholly unsubstantiated, and vague at best.  The respondents seek to rely on the size of their operation as a factor mitigating penalty, but have furnished no meaningful evidence in support of such a contention.  
119	In respect of the size and nature of AHCS relative to Mrs Kelly, it was contended for her that she was a vulnerable employee because she depended upon AHCS to pay her salary and other entitlements and that “she could not pay herself”.  The respondents dispute the characterisation.  
120	I am unable to find any specific vulnerability on Mrs Kelly’s part.  Such vulnerability, as it is usually understood in a workplace context is a specific quality beyond being an employee (simpliciter) in the employer-employee relationship.  Even then, it is well-established that mere vulnerability is not sufficient to constitute a relevant circumstance for the purposes of penalty.  Rather, there must be some evidence of the exploitation of said vulnerable employee by their non-vulnerable employer: see Hanssen Pty Ltd v Jones (2009) 179 IR 57 per Siopis J at [67] to [68].  The fact that Mrs Kelly was unable to retrieve her own entitlements does not, in my view, warrant her being considered vulnerable in the relevant sense.
121	The nature of the contravenors is a matter of moment in the instant case.  While AHCS is, of course, not itself engaged in legal practice, its sole purpose is to service a firm that is.  At all times relevant to the contraventions, AHCS was directed by the most senior of the legal practitioners of AH and, at present, is solely governed by a legal practitioner who has been found by the first primary Judge to have not only have been involved with AHCS’ contraventions but to have created a scheme so that AHCS could avoid complying with its legal obligations. 
122	For reasons which will be discussed below in relation to specific deterrence, I find that the particular the nature of the contravenor, with Mr Atanaskovic as its controlling mind and a (if not the most) senior manager, are relevant factors which weighs in favour of a considerable penalty being imposed.  As noted, the financial circumstances of the respondents is not the subject of proper evidence and, as such, does not mitigate in relation to penalty.   
Similar previous conduct and corporate culture
123	There is no evidence before the Court to suggest that AHCS (or Mr Atanaskovic) has engaged in previous similar conduct.  By itself, this weighs in their favour.
124	In terms of management culture, the findings made by the Court upon which penalty is being assessed were that, even at the time when AHCS did have directors other than Mr Atanaskovic, he had sufficient influence and power to bend those other directors to his will.  There are a considerable number of findings in the liability judgment pertaining to Mr Atanaskovic’s conduct towards Mrs Kelly and the general tenor of the corporate culture at AHCS (and at AH to the extent that it may be considered to be indistinguishable).  While those findings are not made specifically under the umbrella of the Entitlements Claim which gave rise to the contravention findings, they remain for consideration as indicia of corporate culture and the reality of the management structure which the liability judgment reveals.  The conduct of one actor in the workplace may not, ordinarily, be a basis upon which to conclude that the corporate culture was not conducive to compliance with the Act.  However where that person’s conduct is impervious to management, or the individual is the controlling mind of a corporation and other directors are ineffectual in their restraint of said person, the position changes. 
125	There was no material advanced by AHCS to evidence any specific framework for a culture of compliance, as it existed at the time of the contraventions, or afterwards.  To the extent that a corporate culture of compliance could be inferred from any subsequent disciplinary or corrective measures taken in response to the contraventions, there is similarly no material advanced.  
126	In the absence of that evidence, and having regard to factors discussed in relation to deliberateness, contrition and corrective action, it is open to infer that AHCS, with Mr Atanaskovic now as its sole director and controlling mind is unlikely to have self-disciplined or sanctioned following the finding of the contraventions by the first primary Judge.  
127	While the lack of antecedent contraventions is a matter to be taken into account in favour of the respondents, it is neutralised by the circumstances of the conduct in the present case.  As discussed, even when AHCS had directors in addition to Mr Atanaskovic, it was his will and discretion which dictated the company’s conduct.  Similarly, it was Mr Atanaskovic’s antipathy towards Mrs Kelly which led to the scheme to deny her entitlements.  Accordingly, it is open to conclude that the culture and conduct of AHCS, including the lack of antecedents, is determined by the caprices of Mr Atanaskovic, and that any culture of compliance which might be inferred from the lack of previous similar conduct is therefore counter-balanced.  
128	As such, the impact that these matters have on the question of penalty goes particularly to the question of deterrence.
Contrition 
129	Neither AHCS nor Mr Atanaskovic has exhibited or expressed any contrition or remorse.
Corrective action 
130	As noted at the outset of these reasons, the March Declaration and March Orders were made on 31 March 2022.  By the March Orders, AHCS and Mr Atanaskovic were ordered to pay Mrs Kelly her entitlements (together with interest up to judgment) within 21 days, namely on or by 21 April 2022. 
131	Ultimately the penalty/costs hearing took place on Monday, 24 October 2022.  
132	At the penalty/costs hearing I was informed by Senior Counsel for Mrs Kelly that payment of the amounts required in respect of the Entitlements Claim as ordered in the March Orders had occurred on Friday, 21 October 2022.  
133	To describe this corrective action as “eleventh hour” would be generous.  It is open to infer, and I do, that this payment was made only because of the imminent penalty/costs hearing and in the face of written submissions filed for Mrs Kelly, which expressly criticised the respondents for the failure to meet their legal obligations as being relevant to penalty.  It also demonstrated a total disregard of the Court’s March Orders.  
134	Nonetheless, and as I recently observed in Molina v Galloway [2022] FedCFamC2G 904 at [67], some regard must be had to the corrective action because if corrective action were to have no impact on penalty there would be a correlative disincentive to ever rectify conduct.  
Deterrence 
135	In considering the other relevant factors above, it has been necessary to comment on the conduct of AHCS and Mr Atanaskovic’s involvement in it.  Those factors, the conduct of those respondents, and Mr Atanaskovic’s position as a legal practitioner, are relevant to the question of penalty insofar as they are salient matters which give context to the contravention.  
136	The respondents allege that Mrs Kelly’s submissions on penalty contain “moralistic overtones”.   The respondents seek to emphasise that retribution and denunciation have no part to play in the assessment of an appropriate penalty.  The latter proposition is not in doubt.  As the High Court recently made clear in Pattinson at [16], penalty is not aimed at retribution for conduct: see also Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155 at [19] per Allsop CJ, White and O’Callaghan JJ.  
137	In the giving of reasons for the assessment of conduct in a judgment, it is necessary that a court be able to describe it.  Similarly, in making submissions consequent upon a judgment, other parties are entitled to describe conduct by reason to established findings.  In assessing penalty, acts or omissions may need to be described in terms of their seriousness as against legal (or even professional) obligations.  The respondents variously described Mrs Kelly’s submissions as being “highly emotive and exaggerated”, “emotively charged” and “breathless”.  I discern no moral tone, nor any hyperbole or irrationality in submissions made for Mrs Kelly.  The submissions made for Mrs Kelly which relied on the liability judgment were consistent with it and moderate.  Adjectives which are required to explain how a party has conducted themselves should not be marginalised as being emotive, provided they are necessarily directed to concepts of propriety, by reference to law.  Nor does the use of such language in a judgment mean that any penalty imposed has a punitive quality.  
138	The purpose of imposing any penalty against either or both of the respondents in this case is primarily, if not solely, to promote public interest in compliance with the Act and to deter further conduct of the kind which gave rise to the contraventions in this case: see Pattinson at [9] and [15]. 
139	Employers must be dis-incentivised from shirking their legal obligations.  That is moreso where that evasion stems from spite and/or or a desire to deprive an employee of entitlements, such that the employer would stoop to deceit, and the industrious creation of legal artifice in an attempt to resist compliance.  This is a fortiori still, when the nature and industry within which the employer is engaged (even if tangentially) is the practice of law.  Law firms, and their related entities, are not the only institutions led at their upper levels by skilled, competitive and highly ambitious professionals.  However, law firms more readily possess the in-house knowledge, skillset and workforce capable of devising ways by which they might seek to avoid meeting their obligations.  Most employers would stop short of the contrivance which occurred in this case.  Clearly, some do not.  All should.  Deterrence in this matter warrants the imposition of penalty which will demonstrate this. 
Specific deterrence 
140	AHCS pursued its cross-claims based upon the contrived letter agreements which had been designed to shift loss to it, loss it had not suffered.  The cross-claims were found to have been the “brainchild” of Mr Atanaskovic.  In all the circumstances of this case, there is a considerable need to specifically deter AHCS and Mr Atanaskovic from engaging in similar conduct again.  
141	In Pattinson the High Court observed the following at [60]: 
Indeed, in some cases, the circumstances of the contravenor may be more significant in terms of the extent of the necessity for deterrence than the circumstances of the contravention. In this regard, it is simply undeniable that, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravenor to abide by the law rather than to adhere to its preferred policy than will be necessary to persuade a poorly resourced contravenor that its unlawful policy preference is not sustainable. It is equally obvious that, the more determined a contravenor is to have its way in the workplace and the more deliberate its contravention is, the greater will be the financial incentive necessary to make the contravenor accept that the price of having its way is not sustainable.
142	The respondents say that nothing in the liability judgment gives rise to a basis for attributing Mr Atanaskovic’s conduct to AHCS.  I disagree. 
143	It is apparent from the liability judgment, in particular the specific findings about AHCS, Mr Atanaskovic’s control of it and the lengths to which they were prepared to go to contrive the letter agreements in support of the cross-claims solely to defeat Mrs Kelly’s Entitlements Claim, that AHCS was very much an employer who was determined to have its way in the workplace.  I refer to the matters discussed at [124] to [127] above.
144	Based on the findings of the first primary Judge it seems uncontroversial to say that AHCS’ way was, in actuality, Mr Atanaskovic’s way, irrespective of whether or not there were other directors at the helm of AHCS.  
145	In respect of deterrence the respondents sought, at a number of junctures, to emphasise the uniqueness of the present case relying on the lack of antecedent breaches by AHCS and Mr Atanaskovic.  The respondents also rely on Mrs Kelly’s own submission that this is an “extraordinary case” as a basis for saying that the conduct was so anomalous that the need for deterrence is relatively limited.  However, I do not accept that to be so. Neither AHCS nor Mr Atanaskovic should be in any doubt that AHCS’ failure to pay Mrs Kelly’s statutory and contractual entitlements was a breach of the Act, and that the manner and method of their attempts to otherwise resist compliance with AHCS’ obligations were a defiance which warrants the imposition of a penalty with the strongest deterrent effect.  The fact that after Mrs Kelly’s departure, the lengths to which AHCS went to avoid meeting its obligations as an employer involved artifice and deceit, is a relevant factor.  To the extent that Mr Atanaskovic orchestrated the contraventions, the need to impose a penalty in the interests of specifically deterring each of AHCS and Mr Atanaskovic is significant.  
146	In this regard, any penalty imposed against AHCS and Mr Atanaskovic must ensure that neither of them considers in future that there is a sufficient dividend in conducting themselves in this way, in respect of any employee.  The fact that one has the in-house ability to concoct a legal artifice to avoid obligations, does not mean that one should do so.  Any penalty in this matter should provide a sufficient disincentive to AHCS and Mr Atanaskovic from using the latter’s considerable legal prowess to contravene the Act in the aforementioned, unmeritorious manner.  
147	The penalty in this case should serve as an impediment of such significance to similar contraventions that it will survive a risk/benefit analysis as being something that AHCS or Mr Atanaskovic would entertain in the future as being a viable course.  That is particularly so given that they have internal legal resources at their disposal, namely, AH. 
General deterrence 
148	The findings above in relation to specific deterrence have resonance in relation to general deterrence also.  No employer should deliberately and wilfully withhold the entitlements of an employee on the basis of a contrived claim for set-off.  AHCS did not genuinely consider it had suffered a loss at the hands of Mrs Kelly, nor could it.  
149	The Act provides for genuine deductions to be made from entitlements.  Accordingly, there is a public interest in deterring employers from sifting around creatively to contrive other bases upon which they might resist paying entitlements which are properly owed.  There is a need to discourage the conduct which occurred in this case by penalty imposed at a level which underscores the egregiousness of it and dis-incentivises the bringing of unmeritorious cross-claims, for ulterior purposes.  It is generally accepted that employees may struggle to pursue their entitlements claims against better-resourced employers.  In light of the existing imbalance, it is less desirable still that employees should face the additional obstacle of having to defend spurious counter-suits.  The need to ensure that improper set-off claims are not an easily contemplatable, strategic option attractive to employers is demonstrated in the instant case to be a real one. 
Award of penalty 
150	Mrs Kelly seeks that penalty be imposed at the maximum for each contravention and in respect of each of AHCS and Mr Atanaskovic.   
151	As noted earlier, while opposing the imposition of penalty entirely the respondents made submissions upon the contingency that the Court would not accede to that course.  By those submissions the respondents advance mutually inconsistent positions in respect of AHCS and Mr Atanaskovic, which given they are jointly represented is somewhat odd.   
152	Initially the respondents say that Mrs Kelly “latches onto” the finding of the first primary Judge that pursuit of the scheme underpinning the cross-claims was the brainchild of Mr Atanaskovic, as meaning that each of AHCS and Mr Atanaskovic should be equally liable for the contraventions, a proposition Mr Atanaskovic resists.  Despite the finding of the first primary Judge that AHCS and Mr Atanaskovic were jointly liable, Mr Atanaskovic says that if there should be any penalty imposed on him, it must be nominal.  Later, Mr Atanaskovic says that no penalty should be awarded against him, but only against AHCS.  
153	It is also submitted that the composition of the AH partnership has materially changed.  The respondents say (albeit without corroborating evidence) that AHCS has no assets of its own and that all funding and resources are provided to it by AH, of which Mr Atanaskovic is now the sole equity partner.  Accordingly, the respondents say that in reality Mr Atanaskovic would personally bear the burden of any penalty imposed against AHCS, such that imposing a penalty on it results in a double penalty being imposed on Mr Atanaskovic.  It was also submitted that no penalty should be imposed on AHCS because it cannot be held responsible for Mr Atanaskovic’s conduct.  This submission is said to be a mitigating factor by which the Court should be persuaded that there is a balance to be struck (in quantum) between individuals against whom penalty may be imposed.  
154	However, the fact that Mr Atanaskovic will have a total discretion as to funding the payment of any penalty imposed on AHCS, is concerning.  I agree with submissions made for Mrs Kelly that in the absence of Mr Atanaskovic offering an undertaking to the effect that AHCS will meet its obligations, there is no veracity to an argument of double punishment where each party seeks to point to the potential penalty set against the other, yet where the same person controls the ability of each to pay.  That is particularly so in light of AHCS’ breach of the March Orders and the late payment made to Mrs Kelly in eventual compliance with them.    
155	The respondents next say that if any penalty were to be imposed on AHCS, it should be imposed as a single penalty for all four contraventions, relying upon observations in New Shanghai per Bromwich J at [43].  Aggregation has been addressed already.  In any event, in that part of New Shanghai, his Honour was considering the principles applicable to circumstances where the regulator and respondents had jointly proposed a penalty, and the Court was considering that agreed range, proportionate to the total of unpaid entitlements.  The passage relied upon does not stand for a general proposition contended for by the respondents that any penalty which results in a sum being above 60% of the total underpayment amount is “heavy-handed”.  
156	Having regard to [72] and [95] to [149] above, I am satisfied that in the exercise of my discretion, penalty should be imposed in this matter against AHCS and Mr Atanaskovic.  The various positions contended for by the respondents, as to which of them is responsible or in which measure (see [152] above) do not, in my view, accurately reflect the findings of the first primary Judge.  
157	Penalty should be imposed against each of AHCS and Mr Atanaskovic in equal proportion (referable and relative to the respective statutory maximums which apply to them).  I reject the suggestion that either (or each) of them can be held safe against penalty by blaming the other.  AHCS conducted itself in the manner giving rise to the contraventions specifically at the direction of Mr Atanaskovic, as a fair reading of the liability judgment makes clear.  
158	Having decided that the imposition of penalty is warranted, then in all the circumstances of this case I make the following findings about the penalties which should be imposed. 
Failure to pay Mrs Kelly accrued unused annual leave entitlements in full without deduction (Contraventions 1 and 4)
159	As found above, each of contraventions 1 and 4 will be treated as being a single contravention, and penalty will be set by reference to s 323 of the Act.
160	This breach by AHCS was wilful, sustained and continued even after the time for rectification was ordered by the Court.  The contravention was serious, undertaken by senior management of AHCS (who acceded entirely to Mr Atanaskovic’s will) and is one in respect of which there is a strong interest in both specific and general deterrence.  There has been absolutely no contrition from either AHCS or Mr Atanaskovic and the sustained nature of the contraventions must be viewed in light of the aspects of artifice, contrivance and the consequential element of deceit which that carries, in seeking to avoid compliance with AHCS’ obligations.  
161	In all the circumstances of this case the maximum penalty ought be imposed on each of AHCS and Mr Atanaskovic, being 300 penalty units in respect of AHCS and 60 penalty units in respect of Mr Atanaskovic.  
162	I am prepared to apply a five percent reduction to each amount on the basis that, even if in breach of the Court’s orders for six months, payment to Mrs Kelly of the amounts owed to her for her unpaid annual leave entitlements was eventually paid, even if only within 72 hours of the penalty/costs hearing such that she finally received her entitlements.  Accordingly, after the application of the reduction for corrective action, for this contravention the penalties are as follows: 
(a)	AHCS: $51, 300; and 
(b)	Mr Atanaskovic: $10, 260. 
Failure to pay Mrs Kelly long service leave entitlements in full without deduction 
163	While sought by Mrs Kelly in the alternative, I find it unnecessary to proceed to penalty under s 10 of the LSL Act.  Penalty will be set by reference to s 323 of the Act.
164	This contravention, in breach of statute, was as equally wilful and sustained as contraventions 1 and 4.  I repeat my findings at [160] to [162] above in respect of this contravention. 
165	As with contraventions 1 and 4, this contravention warrants the maximum penalty to each of AHCS and Mr Atanaskovic with a five percent reduction to each amount given that Mrs Kelly did eventually receive her long service leave entitlements.  Accordingly, in respect of this contravention the penalties imposed are as follows: 
(a)	AHCS:  $51,300; and 
(b)	Mr Atanaskovic: $10,260. 
Failure to pay Mrs Kelly unpaid wages in full without deduction (contractual)
166	For the same reasons at [160] to [162] and [165] the maximum penalty with a five percent reduction will be set in respect of this contravention also, based on Mrs Kelly’s eventual receipt of her unpaid wages.
167	Accordingly, in respect of this contravention the penalties imposed are as follows: 
(a)	AHCS: $51,300; and 
(b)	Mr Atanaskovic: $10,260. 
Totality
168	The total penalty by reference to paragraphs [160] to [162], [165] and [167] the total penalties imposed are as follows: 
(a)	AHCS:  $153,900; and 
(b)	Mr Atanaskovic: $30,780. 
being a final total of $184,680.  
169	In accordance with the totality principle, and having regard to the proportion of total penalty by reference to the underpayment of entitlements, I am of the view that the penalties imposed against each relevant respondent is appropriate in all the circumstances of the present case.  The contraventions viewed as a whole warrant a meaningful and substantial penalty being imposed, particularly by reference to the principles of deterrence.  The penalties set above in respect of the respondents’ individually, and the total of the overall penalty, adequately reflect the degree and nature of offending in the instant case.  In my view it is unnecessary by reference to the totality principle to adjust the amounts in [168] further.  I will order that the penalties be paid within 28 days of the date of this order.  
170	By her amended penalty/costs application, Mrs Kelly seeks that any penalties imposed on the respondents be paid to her.  The respondents did not specifically resist that proposition except insofar as they submitted that if a penalty were to be ordered pursuant to s 10 of the LSL Act, as opposed to for a contravention of the Act, such penalty should be paid to the consolidated fund of the State of New South Wales: see Larne-Jones v Human Synergistics Australia Ltd [2016] FCCA 368 per Judge Barnes.  Having found that the failure to pay Mrs Kelly’s long service leave entitlements is a contravention for the purposes of the Act and imposed penalty accordingly, the question of to whom the respective penalties should be paid then falls within the ambit of s 346 of the Act. 
171	In all the circumstances of this case, I am satisfied that each of the penalties imposed should be paid to Mrs Kelly pursuant to s 546(3)(c), and I will so order.
Costs
172	The parties make competing applications for costs as follows: 
(a)	by her amended penalty/costs application, Mrs Kelly seeks that AHCS and Mr Atanaskovic pay her costs of and incidental to: 
(i)	her Entitlements Claim on an indemnity or, if not, party/party basis;
(ii)	the respondents’ cross-claims on an indemnity or, if not, party/party basis; and 
(iii)	the penalty/costs stage of the proceedings.
(b)	by their costs application filed on 10 May 2022, the respondents seek orders that Mrs Kelly pay the costs of and incidental to the: 
(i)	Adverse Action Claims (save and except for the Entitlements Claim) on an indemnity basis, or otherwise on a party/party basis; and 
(ii)	the respondents’ costs application. 
173	Mrs Kelly seeks that costs orders be made only against AHCS and Mr Atanaskovic.  Notwithstanding the involvement of AHCS’ other directors in the failure to pay Mrs Kelly’s entitlements and the bringing and maintenance of the unmeritorious cross-claims, in the circumstances of this case and having regard to the findings in the liability judgment, I am satisfied that it is appropriate to consider costs against AHCS and Mr Atanaskovic only.  
174	It is not in dispute between the parties that because each of the competing costs applications arises in the context of proceedings under the Act, costs will only be ordered if s 570(2) of the Act applies.  Section 570 is in the following terms: 
Costs only if proceedings instituted vexatiously etc.
(1)  A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note	The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2)  The party may be ordered to pay the costs only if:
 (a)  the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
 (b)  the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
 (c)  the court is satisfied of both of the following:
(i)  the party unreasonably refused to participate in a matter before the FWC;
(ii)  the matter arose from the same facts as the proceedings.
175	Section 570 operates as an express limitation on the broad discretion to award costs which is conferred on this Court by s 214 of the Court Act: see Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 at [140] per Tracey, Gilmour, Jagot, White and Beach JJ.  Section 214 of the Court Act includes a discretion to order costs on an indemnity basis: see Naudi v Baig [2022] FedCFamC2G 14 per Judge Brown at [121] to [122] and Owners - Strata Plan No 77992 v Arouchanov [2021] FedCFamC2G 20 per Judge Baird at [16].   
176	Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs: Construction, Forestry, Mining and Energy Union v Corinthian Industries (Aust) Pty Ltd (No 2) [2014] FCA 351 per Pagone J at [12].  
177	The Court’s power to make cost orders pursuant to s 570(2) of the Act must be exercised cautiously for public interest reasons: see Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 per Dowsett, McKerracher and Katzmann JJ at [8].  The question of whether a party has acted unreasonably for the purposes of s 570 turns on the facts and circumstances of the case at hand: see Sivwright v St Ives Group [2022] FCA 136 per Jackson J at [9].
178	In order for Mrs Kelly’s costs claim to succeed the Court would need to be satisfied that pursuant to s 570(2)(b) of the Act, AHCS and/or Mr Atanaskovic engaged in an unreasonable act or omission which caused Mrs Kelly to incur costs.  If so satisfied, the Court is then asked by Mrs Kelly to award costs on an indemnity basis.  The considerations in that regard are those which usually attend the question of whether there is a special or unusual feature of the case to justify a departure from the ordinary practice that costs be on a party/party basis, and will only occur in a limited range of circumstances see: see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J at 230 to 234 cited in Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 per Tracey J at [39].
179	At all times in these proceedings, AHCS and Mr Atanaskovic maintained that the sole reason Mrs Kelly’s contractual and statutory entitlements were not paid to her upon the cessation of her employment with AHCS was because of the equitable set-off the subject of the cross claims.  I agree with the submission made for Mrs Kelly that, so understood, the decision to defend the Entitlements Claim and the institution of the cross-claims were two sides of a single justiciable controversy.  
180	In respect of the respondents’ claims for costs, I would need to be satisfied that Mrs Kelly had instituted the proceedings (or more specifically to the relief sought, a relevant component of the  Adverse Action Claim) without reasonable cause or prospects of success, such that it was an unreasonable act which caused them to incur costs.  In respect of Mrs Kelly’s costs application, I would similarly need to be satisfied that at the time of the institution of the 
cross-claims there was no substantial prospect of those claims succeeding, such that their institution constituted an unreasonable act which caused Mrs Kelly to incur costs.  
181	Whether or not those claims ultimately failed does not, in and of itself, inform the reasonableness of their commencement: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 (Kanan) per Wilcox J at 264 to 265.
182	Costs orders made pursuant to s 570(2) of the Act do not arise to punish litigants for undertaking an unreasonable course of action, but rather are made on the basis that a measure of reimbursement should be conferred upon another party for the costs incurred in the conduct of, or need to respond to, unreasonably instituted proceedings: Kanan (supra) at 265.  However, as Gilmour J observed in R v Patrick Projects Pty Ltd (No 2) [2017] FCA 388 at [10]:
That a party has a “self-evidently weak case” is not enough to warrant a costs order. There must be “a higher level of criticism or disapprobation”: Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987 at [14]. Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 even though elements of the FWO’s case were “artificial and unsatisfactory” and “potentially bizarre”: at [12]–[17] cross-referencing to the liability decision - Fair Work Ombudsman v Valuair Ltd (No 2) (2014) 224 FCR 415.
Mrs Kelly’s costs application 
183	In respect of Mrs Kelly’s costs application, I am satisfied that its subject matter concerns a proceeding in this Court in relation to a matter rising under the Act and therefore the Court has power to award costs against the respondents if s 570 is satisfied.  
184	Mrs Kelly points to the following factors as warranting a finding that AHCS and Mr Atanaskovic engaged in unreasonable acts which caused her to incur costs, and that these same factors warrant that those costs be ordered on an indemnity basis: 
(a)	that absent the entry by AHCS and AH into the contrived letter agreements, it is indisputable that AHCS would have suffered no loss; 
(b)	Mr Atanaskovic devised a plan by which AHCS assumed a loss not suffered by it, for the purposes of claiming a set-off, by entering into the contrived letter agreements. This was done with a view solely to defeating Mrs Kelly’s  Entitlements Claim, rather than to pursue a genuine claim by an entity or person who has suffered loss;
(c)	the contrived letter agreements were necessarily ineffective at law which must have been apparent at the time they were entered into and when the cross-claims were commenced;
(d)	in those circumstances, there was never a (mathematical) possibility that damages awarded for the cross-claims would be sufficient to effect a set-off against Mrs Kelly’s entitlements;
(e)	there is no real doubt in this case that the decision to bring the cross-claims caused Mrs Kelly to incur significant costs (with the quantum of those costs being a matter for assessment); and
(f)	in the circumstances, it was an “unreasonable act” to put Ms Kelly to the considerable expense of defending the cross-claims in order to receive her entitlements, and to take up valuable Court time and resources in the disposition of the cross-claims.
185	The respondents resist the above contentions by once again taking a liberal, and somewhat skewed, interpretation of the liability judgment, and say that no conduct by them enlivens 
s 570 of the Act.  Said interpretation involves the contention that the cross-claims failed because the respondents’ did not sufficiently discharge their evidentiary onus, and not because AHCS’ losses were un-arguable.   
186	The respondents rely on Williams v Spautz (1992) 174 CLR 509 per Brennan J (as his Honour then was) at 535, to submit that the existence of collateral purpose for bringing the cross-claims would not, in and of itself, mean that they were an abuse of process.  The standard in a costs context as to whether there is an ulterior purpose is different than that in respect of the tort of collateral abuse of process.  An action may be commenced to obtain the relief specifically sought in the proceeding and yet still be conduct which has an ulterior purpose.  The question of whether costs ought be ordered on an indemnity basis does not necessarily mandate there be an abuse of process, and the authorities have long made clear that among the various features present in a case which might warrant departure from the ordinary basis include those where: 
…unsuccessful proceedings have been brought and prosecuted, not for the bona fide purpose of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose.
see Ragata Developments Pty Ltd v Westpac Banking Corporation (Unreported, Federal Court of Australia, 5 March 1993).
187	In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 (Fountain Selected Meats), Woodward J said the following at 401 (emphasis added):
Another case cited in argument was Australian Guarantee Corp Ltd v De Jager [1984] VR 483 where (at 502) Tadgell J allowed solicitor and client costs because he found the pursuit of the action to have been ‘a high-handed presumption’.
No doubt the expression “high-handed presumption” was appropriate in the case Tadgell J had to decide, and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.
188	The first primary Judge found the institution and maintenance of the cross-claims by AHCS were simply and solely to defeat Mrs Kelly’s Entitlements Claim and were only raised when Mrs Kelly sought to be paid her entitlements.  The relief that was sought by the cross-claims matched their stated purpose, namely extinguishing by set-off the amounts owed to Mrs Kelly in respect of her Entitlements Claim.  However, the cross-claims were not for the purpose of enforcing a bona fide legal right, because the alleged right was artificial and contrived, by reference to AHCS having not suffered any loss.  AHCS was found to have not acted reasonably in accepting liability for the losses which were the subject of the contrived letter agreements.  
189	The bringing of the cross-clams also involved a wilful disregard for known facts.  This is reflected by AHCS entering into the contrived letter agreements and preparation of incorrect Board minutes in an attempt to make good the cross-claims.  Those actions were undertaken to alter the fact that AHCS had not actually suffered loss.  AHCS and Mr Atanaskovic would have known that the facts as they truly existed, absent artifice, contrivance and the creation of documents to give false credence, were insufficient to maintain the alleged equitable-set off.  
190	As the High Court recently observed in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333 per Kiefel CJ, Bell, Keane and Gordon JJ at [18]: 
A self-representing solicitor, lacking impartial and independent advice that the court expects its officers to provide to the litigants they represent, may also lack objectivity due to self-interest.
191	Independent legal advice would likely have cautioned AHCS against pursuit of an artificial scheme to defeat Mrs Kelly’s Entitlements Claim and included that the cross-claims did not have a reasonable prospect of success: see Fountain Selected Meats (supra) at 401 (see [187] above).  
192	AHCS (following Mr Atanaskovic’s directions) unreasonably pursued the desired course of bringing the cross-claims using the contrived letter agreements to defeat Mrs Kelly’s Entitlements Claim.  I am satisfied that resisting Mrs Kelly’s Entitlements Claim, including by the bringing and maintenance of the cross-claims, were unreasonable acts by the respondents which caused Mrs Kelly to incur costs.  I am satisfied that s 570(2)(b) of the Act is satisfied and, in the exercise of my discretion, AHCS and Mr Atanaskovic should pay the costs of and incidental to: 
(a)	Mrs Kelly’s claims in relation the first and third respondents’ contraventions of ss 44, 90(2) and 323 of the Act; 
(b)	the respondent’s cross-claims; and
(c)	the amended penalty/costs application.
193	Having regard to the principles which attend the basis upon which those costs should be awarded, I am further satisfied that in the circumstances of this case, that the same conduct which I have found to be unreasonable for the purposes of s 570 is of such a kind that the costs referred to at [192(a)] and [192(b)] should be paid on an indemnity basis.  I will so order.  The costs of the amended penalty/costs application should be paid on a party/party basis. 
194	The Court has now imposed penalties which arise from the contraventions found in respect of the Entitlements Claim, sought by Mrs Kelly’s amended penalty/costs application.  The Court has also made findings that Mrs Kelly should have the costs sought pursuant to s 570 of the Act.  Accordingly, in the exercise of my discretion in respect of costs, I find it follows that Mrs Kelly should also have her costs of the amended penalty/costs application.  
Respondents’ costs application
195	In respect of the respondents’ costs application, I am satisfied that Mrs Kelly’s claims, including her Adverse Action Claims is a proceeding in this Court in relation to a matter arising under the Act.  Accordingly, the Court has power to award costs against Mrs Kelly if s 570 is satisfied, and the same principles regarding unreasonableness, as set out above at [177] and [181] to [182], apply.  
196	The respondents say that Mrs Kelly advanced a number of claims against them pursuant to 
s 340 of the Act.  Within the Adverse Action Claims was a claim that Mr Atanaskovic engaged in adverse action against Mrs Kelly because she had exercised a workplace right by making complaints about him.  It is only in respect of that aspect of Mrs Kelly’s Adverse Action Claims that the respondents seek their costs.  Those costs are sought on an indemnity basis. 
197	Ultimately, the first primary Judge accepted that many aspects of Mrs Kelly’s Adverse Action Claims were made out. While accepting that Mr Atanaskovic’s conduct towards Mrs Kelly had occurred, and constituted bullying, his Honour found that the evidence did not establish that Mr Atanaskovic conducted himself in said manner because of complaints Mrs Kelly had made to Messrs Hartnell and Sophocles about him.  In fact, the evidence revealed that the complaints had been concealed from Mr Atanaskovic because Mr Hartnell had concluded that raising them with Mr Atanaskovic would probably have made things worse for Mrs Kelly, an assessment with which the first primary Judge concurred. 
198	The respondents say that to succeed in this aspect of her Adverse Action Claims Mrs Kelly would have been required to lead direct evidence which established that Mr Atanaskovic had been made aware of the complaints, and that she did not do so.  
199	It is unsurprising, and hardly uncommon in a claim under s 340 that an applicant would not (at least initially) have in their possession such direct proof.  The respondents acknowledge this by saying that Mrs Kelly may have been hoping that by using interlocutory mechanisms and compulsory court processes, such evidence would be forthcoming but that this unfulfilled hope demonstrates that she did not have any substantial prospect of success at the time she brought her claim.  
200	Further, and in the alternative, the respondents say that even if that was not so, at a certain juncture in the proceedings Mrs Kelly must have known she could not make good the claim and, therefore its maintenance was an unreasonable act or omission.  The respondents say that, once served with their Affidavit material from late 2018 to mid-2019, Mrs Kelly was on notice that the evidence of Messrs Hartnell and Sophocles was that they had not communicated Mrs Kelly’s complaints to Mr Atanaskovic.  The respondents say from that point in time, Mrs Kelly had no evidence upon which she could advance or maintain this aspect of the Adverse Action Claim.  
201	Mrs Kelly points to the statutory presumption in s 361 of the Act, the effect of which was expressly acknowledged by the first primary Judge when he said the following at [301] of the liability judgment: 
Section 361 of the Fair Work Act effectively reverses the onus in respect of proving the reason that action was taken for the purpose of contraventions of Part 3-1 of the Fair Work Act (which includes s 340). A person acts for a particular reason if the reasons for the action include that reason.
202	At the time Mrs Kelly brought her claim, it was open for her to infer from the variety of vitriolic conduct inflicted upon her by Mr Atanaskovic, that he was privy to the complaints she had made about him and that these were the catalyst for such behaviour.  The timing of various incidents addressed in the liability judgment support this.  One such allegation is addressed thusly by the first primary Judge at [341] to [343]: 
On 9 July 2015 (being two days after Mrs Kelly made her first complaint and the day after she made her second complaint), Mr Atanaskovic sent an email to Mr Sophocles (copied to Mrs Kelly) which stated, among other things, “this is one of the reasons why I keep telling [Mrs Kelly] that her insistence that people bill on a menstrual based cycles…” (Second Adverse Action). It was shocking for Mr Atanaskovic’s to be suggesting to any partner of AH (and a director of AHCS) that Mrs Kelly was influenced in any way by her “menstrual based cycle” in the conduct of her employment duties.
I do not accept Mr Atanaskovic’s evidence concerning the meaning of “menstrual based cycle”. A menstrual cycle is variable and hence is not strictly a monthly cycle and certainly not a solar monthly cycle. The barb was directed at Mrs Kelly as a woman.
Again, this email served to humiliate, bully, abuse, belittle and victimise Mrs Kelly in front of Mr Sophocles and carried with it the capacity to injure and prejudice Mrs Kelly.
203	Mrs Kelly says that factors such as the proximity of Mr Atanaskovic’s “menstrual based cycle” email to her having recently made a complaint, made it imminently reasonable for her to infer that the adverse action was directly referable to, and taken against her, because of her having exercised a workplace right within the meaning of s 340 of the Act.  
204	In Cai v Tiy Loy & Co Ltd [2015] FCCA 715 (Cai), Judge Manousaridis discussed the manner by which an employer proves that conduct was “otherwise” for the purposes of s 361 including the following observations of his Honour at [110] to [111]: 
In most cases the employer, or, in the case of a corporation, the person or persons whose minds constitute the mind of the corporation for the purposes of the conduct that constitutes the adverse action, will give evidence of his or her recollection of the reason or reasons for which the employer claims the employer took the adverse action. That by itself, however, will rarely be sufficient to prove the employer took the adverse action for the reason or reasons the employer recalls the employer took such action. Such evidence will need to be weighed according to a number of matters. These may include any one or more of the following:
a) the inherent plausibility, coherence, and consistency of the employer’s evidence that the employer acted for the reason or reasons the employer says the employer acted;
b) the completeness of the evidence that is adduced in support of the employer’s claim that the employer took the adverse action for the reason or reasons the employer claims the employer took the adverse action;
c) where the reason the employer claims the employer took the adverse action included the employer’s believing a state of affairs existed or did not exist, whether there is evidence of the existence or non-existence of that state of affairs, or evidence of the reasonableness of the employer’s belief;
d) whether there are contemporaneous documents that support the employer’s evidence that the employer took the adverse action for the reasons the employer claims the employer took that action;
e) if there are no such documents, whether it is reasonable to expect that such documents would have been created if the employer took the adverse action for the reason the employer claims the employer took the adverse action; and
f) whether there are other persons who were involved in the conduct that constituted the taking of adverse action, and, if so, whether they have given evidence which supports the evidence the employer gave of the reasons for which the employer took the adverse action.
A third aspect of an employer’s proving “otherwise“ is that, because the employer bears the onus of proving the employer did not take the adverse action for a proscribed reason, the employer bears the evidentiary burden of proving so. That is, the employer must adduce evidence that is capable of grounding a reasonable inference that the employer took the adverse action for the reason or reasons the employer claims the employer took that action. If the employer does not adduce such evidence, the employer will not be able to prove “otherwise“.
205	Just because the respondents’ Affidavit evidence contained denials that adverse action was taken by reason of Mrs Kelly having exercised a workplace right, or even that Mr Atanaskovic was said to be unaware of the complaints, did not (in and of itself), render Mrs Kelly’s Adverse Action Claims without a reasonable prospect of success.  
206	In Wong v National Australia Bank Ltd [2021] FCA 671, Snaden J recently observed the following at [182]: 
There is no evidence before the court that tends directly to prove that any of the three relevant instances of adverse action was so actuated. Ms Wong does not rely upon direct proof of the fact that she alleges. She relies, instead, upon the statutory presumption for which s 361 of the FW Act provides and upon inferences that she would have the court draw. There is nothing unusual about that: direct proof of purpose or intent in a case such as this is rarely to be found and Ms Wong’s prosecution of the matter was, in that sense, entirely orthodox.
207	Against the factual background relied upon by Mrs Kelly in bringing her Adverse Action Claim, it was then open to her to maintain the claim even in the face of the denials advanced by the respondents.  That is because it remained reasonable, in all the circumstances and chronology of this case, to urge a claim pursuant to s 340 of the Act upon the Court.  There was a very real prospect that, with the benefit of all evidence and its testing by cross-examination, the first primary Judge might draw inferences that Mr Atanaskovic humiliating, bullying, abusing, belittling and victimising Mrs Kelly was, on balance (and despite his denials), because of her complaints against him and not just because that was his modus operandi when someone attracted his ire.  That the first primary Judge was ultimately not satisfied that the Adverse Action Claims were made out by inferential reasoning, did not mean that Mrs Kelly had acted in a way that was unreasonable in maintaining the Adverse Action Claims or any part of it.  
208	Overall, I am not satisfied that the maintenance by Mrs Kelly of her Adverse Action Claims was unreasonable.  Accordingly, the respondents’ cost application cannot succeed by reference to s 570 of the Act and their costs application, filed on 10 May 2022, is dismissed.
209	

I certify that the preceding two hundred and eight (208) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given.	

Associate:

Dated:	2 February 2023

SCHEDULE OF PARTIES

	SYG 1194 of 2017	
Respondents		
Fourth Respondent:	TONY HARTNELL	
Fifth Respondent:	JEREMY KRIEWALDT	
Sixth Respondent:	MICHAEL SOPHOCLES	
Seventh Respondent:	JON SKENE