Fair Work Ombudsman v Bedington [2012] FMCA 1133 (29 November 2012) Last Updated: 3 December 2012 FEDERAL MAGISTRATES COURT OF AUSTRALIA FAIR WORK OMBUDSMAN v BEDINGTON [2012] FMCA 1133 INDUSTRIAL LAW – ‘Sham’ contract of employment – agreed statement of facts – admission of breach – considerations regarding penalty – agreed penalty not appropriate – penalty fixed. Corporations Act 2001 Fair Work Act 2009 (Cth), ss.14(a) , 44 , 45 , 87 (2), 90 (2), 357 (1), 539 (2), 545 (1), 546 (1), 547 (2), 550 , 550 (2), 557 , 712 Hair and Beauty Industry Award 2010, cl.33.3 A & L Silvestry Pty Limited v C onstruction, Forestry, Mining and Energy Union [2008] FCA 466 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 Carr v CEPU [2007] FMCA 1526 CPSU v Telstra Corporation Limited [2001] FCA 1364 ; (2001) 108 IR 228 Darlaston v Risetop Construction Pty Ltd and Ors [2011] FMCA 220 Fair Work Ombudsman v Centennial Financial Services Pty Ltd [2011] FMCA 459 Fair Work Ombudsman v Land Choice Pty Ltd [2009] FMCA 1255 Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation Limited [2007] FMCA 7 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 ; (2008) 168 FCR 383 Plancor Pty Ltd v LHMU [2008] FCAFC 170 ; (2008) 171 FCR 357 Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 ; (2007) 158 FCR 543 Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 Applicant: FAIR WORK OMBUDSMAN Respondent: BRYAN CHARLES BEDINGTON File Number: BRG 360 of 2012 Judgment of: Jarrett FM Hearing date: 8 October 2012 Date of Last Submission: 27 November 2012 Delivered at: Brisbane Delivered on: 29 November 2012 REPRESENTATION Solicitor for the Applicant: Ms Olsen Solicitors for the Applicant: Fair Work Ombudsman Solicitor for the Respondent: Ms Milner Solicitors for the Respondent: Milner Lawyers ORDERS THE COURT DECLARES THAT: (1) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Daniel Elder that the contract of employment under which he was employed was a contract for services under which he was to perform work as an independent contractor; (2) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Muhammad Mehdi that the contract of employment under which he was employed was a contract for services under which he was to perform work as an independent contractor; (3) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Kayne Turner that the contract of employment under which he was employed was a contract for services under which he was to perform work as an independent contractor; (4) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Jessica Bradley that the contract of employment under which she was employed was a contract for services under which she was to perform work as an independent contractor; (5) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Natalie Towns that the contract of employment under which she was employed was a contract for services under which she was to perform work as an independent contractor; (6) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Samantha Dodd that the contract of employment under which she was employed was a contract for services under which she was to perform work as an independent contractor; (7) New Image Beauty Salons Pty Ltd contravened s.357 of the Fair Work Act 2009 by misrepresenting to Esther Marshall that the contract of employment under which she was employed was a contract for services under which she was to perform work as an independent contractor; (8) New Image Beauty Salons Pty Ltd contravened s.44 of the Fair Work Act 2009 by failing to pay to the persons named in declarations 1 – 7 hereof their accrued annual leave at termination pursuant to s.90 of the Fair Work Act 2009 ; (9) New Image Beauty Salons Pty Ltd contravened s.45 of the Fair Work Act 2009 by failing to pay to Samantha Dodd, Esther Marshall and Kayne Turner their accrued annual leave loading at termination pursuant to clause 33.3 of the Hair and Beauty Industry Award 2010 ; (10) The respondent was involved, within the meaning of s.550 of the Fair Work Act 2009 , in New Image Beauty Salons Pty Ltd’s contraventions set out in declarations 1 – 9 hereof. THE COURT ORDERS THAT: (11) The Respondent pay a penalty under s.546(1) and 550 of the Fair Work Act 2009 for New Image Beauty Salons Pty Ltd’s contravention of s.44 of the Fair Work Act 2009 in the amount of $1,980. (12) The Respondent pay a penalty under s.546(1) and 550 of the Fair Work Act 2009 for New Image Beauty Salons Pty Ltd’s contravention of s.45 of the Fair Work Act 2009 in the amount of $1,980. (13) The Respondent pay a penalty under s.546(1) and 550 of the Fair Work Act 2009 for New Image Beauty Salons Pty Ltd’s contravention of s.357 of the Fair Work Act 2009 in respect of: (a) Daniel Elder in the amount of $1,980; (b) Muhammad Mehdi in the amount of $1,980; (c) Kayne Turner in the amount of $1,980; (d) Samantha Dodd in the amount of $1,980; (e) Esther Marshall in the amount of $1,980; (f) Natalie Town in the amount of $1,980; and (g) Jessica Bradley in the amount of $1,980. (14) That the Respondent pay the penalties imposed under orders 11 to 13 to the Applicant within 28 days of the date of this order. (15) That the Applicant apply the monies received by it under order 14 as follows: (a) distributing the following amounts to the following persons: (i) Daniel Elder $1,178.76 (ii) Jessica Bradley $997.41 (iii) Natalie Towns $149.08 (iv) Muhammad Mehdi $680.05 (v) Samantha Dodd $1,512.74 (vi) Kayne Turner $2,164.38 (vii) Esther Marshall $1,605.84 (b) if the Applicant is unable to locate any of the person set out in order 15(a) hereof the Applicant shall remit any monies held on account of those persons to the Commonwealth Consolidated Revenue Fund; and (c) in respect of any remainder, remitting to the Commonwealth Consolidated Revenue Fund. (16) Each party bear their own costs. FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE BRG 360 of 2012 FAIR WORK OMBUDSMAN Applicant And BRYAN CHARLES BEDINGTON Respondent REASONS FOR JUDGMENT The Fair Work Ombudsman alleges that the respondent, Mr Bryan Bedington, was involved in certain breaches of the Fair Work Act 2009 that were committed by New Image Beauty Salons Pty Ltd. Mr Bedington admits that New Image contravened the Fair Work Act as alleged and that he was involved in those contraventions as alleged. By this application, the Fair Work Ombudsman seeks the imposition of pecuniary penalties upon Mr Bedington in respect of the admitted contraventions. Essentially, the allegations against New Image and Mr Bedington are that New Image misrepresented to certain employees that they were engaged under a contract for services, when in fact they were each engaged under a contract of employment. That is to say, the allegation is one of sham contracting. It is alleged, and admitted, that as a consequence of the manner in which they were engaged, each of the relevant employees was not paid any annual leave or annual leave entitlements in contravention of the Fair Work Act . The application proceeds before me as a penalty hearing on the basis of an agreed statement of facts. The parties agree on the penalty that the Court might consider imposing. The form of the order to be made by the Court is also agreed between the parties. For reasons that appear below, however, I have difficulty with the agreed penalty suggested by the parties and the form of the orders I am asked to make. The Relevant Facts The parties have agreed on a statement of facts for the purposes of this application. The agreed facts are set out in a document entitled “Amended Statement of Agreed Facts” filed in court on 8 October, 2012. The following recitation of the relevant facts comes largely, although not exclusively, from that document. New Image was at all material times: duly incorporated under the Corporations Act 2001 (Cth); a national system employer within the meaning of s.14(a) of the Fair Work Act ; carrying on a business located at 859 Stanley Street, Woolloongabba, Brisbane, the principal functions of which were photographic services in the nature of mobile photographic and associated make-over services across Australia; and for varying periods between about 20 January, 2011 to 1 December, 2011 New Image employed the employees particularised later in these reasons. Liquidators were appointed to New Image on 7 September, 2011. At all material times Mr Bedington was: the sole director of New Image; the secretary of New Image; the majority shareholder of Bryna Pty Ltd, the sole shareholder of New Image; responsible for the day to day management, direction and control of New Image’s operations and business; responsible for determining the terms and conditions upon which workers were engaged in the business; and responsible for implementing a system of work whereby workers were engaged in the business as independent contractors. Daniel Elder, Jessica Bradley, Natalie Towns and Muhammad Mehdi were each engaged on a full-time basis to work in the business as photographers travelling around Australia taking portrait and glamour photographs of clients of New Image, selling those photographs to the clients, processing sales and setting up and cleaning up the various venues. Samantha Dodd, Esther Marshall and Kayne Turner were engaged on a full-time basis to work in the business as make-up artists travelling around Australia doing hair and makeup and performing makeovers of clients of New Image for photographic shoots, and setting up and cleaning up the various venues. Ms Marshall was also employed as a photographer. The particulars of the relevant employees and their employment are: Employee Age Date Started Date Finished Daniel Elder 21 14 February, 2011 14 August, 2011 Jessica Bradley 20 11 April, 2011 10 September, 2011 Natalie Towns 9 May, 2011 31 May, 2011 Muhammad Mehdi 20 April, 2011 2 August, 2011 Samantha Dodd 14 February, 2011 14 August, 2011 Kayne Turner 19 17 March, 2011 1 December, 2011 Esther Marshall 20 January, 2011 1 August ,2011 In respect of each of the employees particularised above: New Image exercised a high degree of control over the manner in which they performed their work; New Image provided to each employee the tools and equipment necessary to perform the work including a trailer, all of the photography equipment, accessories, makeup and tools and other items necessary for the application of make-up and styling hair, a lap-top computer, printer and EFTPOS machine; New Image reimbursed them for any purchases they made in relation to the camera, laptop and printer; they were each prevented from subcontracting or delegating their work; they were not free to refuse work allocated to them by New Image; they were unable to work for others; they were not required to generate invoices in order to receive payment from New Image; they had no control over what New Image’s clients were charged for photographs and were required to sell photographs in accordance with New Image’s pricing structure; and they were not required to possess any qualifications. The parties agree that each of the employees was engaged by New Image as an employee, and not an independent contractor. However, at the time each employee was engaged New Image represented to each that the contract under which he or she would perform the work was a contract for services by which they would perform the work as an independent contractor. Each employee received a letter of offer (for present purposes in identical terms) before the engagement was perfected. A representation about the nature of the engagement was contained in the letter of offer as follows: clause 1 of the letter of offer provided: “We will engage you as a self employed Photographer/Make Up Artist with effect from ... to carry out the services (“the Services”) required of Photographers/Make Up Artists as specified in our manual, a copy of which has been handed to you with this letter of offer (“the Manual”).” clause 3 of the letter of offer provided: “You declare that you shall have the status of a self-employed person and shall not be entitled to any wage, salary, leave entitlements of any nature, bonus, fringe benefit or other entitlement or benefit other than commission ...”. Another series of misrepresentations about the nature of the engagement was made orally on behalf of New Image by another employee, Rajesh Parmar, as follows: Parmar said to Mr Elder, Ms Dodd, Ms Towns, Mr Mehdi and Mr Turner (separately the time of the engagement of each) words to the effect that they were required to obtain an Australian Business Number; Parmar said to Ms Towns orally in or about late March or early April, 2011 that she would be engaged as an independent contractor; Parmar accepted from Ms Marshall the details of her Australian Business Number; Parmar said to Mr Mehdi in about April, 2011 words to the effect that he was being engaged as an independent contractor; and Parmar said to Mr Turner orally in about March, 2011 words to the effect that he was being engaged as an independent contractor. Further, other misrepresentations were made orally on behalf of New Image by another employee, Antonia Young, who Mr Bedington admits said to both Ms Marshall and Ms Towns words to the effect that they were required to obtain an Australian Business Number. The parties agree that both Rajesh Parmar and Antonia Young were employed by New Image and when making the representations just referred to, were acting within the scope of their actual or apparent authority. On 16 July, 2007 (nearly four years before the relevant events giving rise to this application) New Image Photographics Pty Ltd (a separate company from New Image, but also operated by Mr Bedington) received a letter from the Workplace Ombudsman in respect of a complaint made by Arif Bey and Ami Schefe, former employees of New Image Photographics Pty Ltd. The letter, a copy of which is attached to Mr Bedington’s response, is both confused and confusing. It appears that the complaint (whatever it was) was not substantiated and the Workplace Ombudsman proposed no further action in respect of it. Although the connection between New Image and New Image Photographics Pty Ltd is not clear, it appears to be assumed by the parties that the entities were so closely connected that these communications from the Workplace Ombudsman and, later, the Fair Work Ombudsman are relevant to Mr Bedington’s knowledge of the contraventions the subject of this application. On 18 June, 2008, the Office of the Workplace Ombudsman advised New Image Photographics Pty Ltd in writing that it had received a complaint from one Erin Buglar alleging that she was due certain entitlements that had not been paid. The issue raised by the complaint was whether Ms Buglar was an independent contractor or an employee of New Image Photographics Pty Ltd. On 4 December, 2008, 26 March, 2009 and 20 April, 2009 the Workplace Ombudsman communicated by telephone and in writing with Mr Bedington (who appears to have a common connection with New Image and New Image Photographics Pty Ltd) that his position was that Erin Buglar was an employee of New Image Photographics Pty Ltd rather than an independent contractor. By letter dated 24 August, 2010 sent by the Fair Work Ombudsman to New Image (as opposed to New Image Photographics Pty Ltd) and Mr Bedington, the Fair Work Ombudsman formally cautioned New Image and Mr Bedington and advised them to undertake corrective action to ensure New Image did not continue to engage workers as independent contractors when their working arrangements were more properly characterised as an employment relationship. Mr Bedington agrees that by reason of the letter of caution New Image knew that when the representations set out above were made to the employees they were in fact being engaged as employees and not as independent contractors. Further, by reason of the letter of caution New Image, at the time the representations were made to the employees, was reckless as to whether the contracts were contracts of employment rather than contracts for services. On 5 April, 2011 the Office of the Fair Work Ombudsman issued a letter to New Image advising it that the Fair Work Ombudsman was conducting a national compliance campaign in relation to sham contracting to ensure compliance with Commonwealth workplace laws and that the business has been selected for auditing. The letter requested completion of an enclosed ‘Entity information form’ and provision of documentation in relation to certain matters by 18 April, 2011. On 5 May, 2011 the Office of the Fair Work Ombudsman issued a Notice to Produce Records or Documents pursuant to s.712 of the Fair Work Act to New Image and Mr Bedington requiring documents be provided relating to contractors engaged by New Image by 20 May, 2011. Some documents were provided pursuant to the request. On 12 August, 2011 the Office of the Fair Work Ombudsman issued a ‘Notification of Outcome’ letter to New Image and Mr Bedington advising that it was not satisfied that New Image was complying with the provisions of the Fair Work Act relating to sham arrangements. The letter advised that further action would be taken. It required further documents to be produced relating to all independent contractors engaged by New Image by 2 September, 2011. On 2 September, 2011 the Office of the Fair Work Ombudsman received information in relation to the engagement of Samantha Dodd, Jessica Bradley, Natalie Towns, Esther Marshall, Muhammad Mehdi, as well as some other people not the subject of this application. On 31 October, 2011 the Office of the Fair Work Ombudsman issued a letter to the Mr Bedington providing an offer for an interview with its investigators. On 11 April, 2012 the Office of the Fair Work Ombudsman issued a letter to Mr Bedington advising that the matter was with the legal section, attaching a draft Statement of Claim and providing the Mr Bedington with an opportunity to provide further information, and (surprisingly) any legal advice, that may be relevant by 19 April, 2012. The parties were unable to resolve their differences and on 30 April, 2012 the Fair Work Ombudsman filed the Application and Statement of Claim in this matter. Agreed Conclusions The parties agree that by reason of the matters set out above, the representations made by New Image about the nature of the engagement of each of the relevant employees, contravened s.357(1) of the Fair Work Act . The parties agree that the consequence of treating the above particularised employees as employees rather than independent contractors is that in respect of the employment of Ms Dodd, Ms Marshall and Mr Turner, the Hair and Beauty Industry Award 2010 applied to cover their employment with New Image. The parties further agree that at all material times Ms Dodd, Ms Marshall and Mr Turner were employed in the ‘Hair and Beauty Employee Level 2’ classification within the meaning of Schedule B of that Award. At the time of the termination of their employment they were entitled to a base rate of pay for ordinary hours of work of $16.94 per hour. The employment of Ms Towns, Mr Elder, Ms Bradley and Mr Mehdi was not covered by a modern award or other industrial instrument. The parties agree that they were each entitled to be paid the national minimum wage under the Fair Work Act . At the time of the termination of Ms Town’s employment the national minimum wage was $15.00 per hour in accordance with s.287(1) of the Fair Work Act . At the time of the termination of Mr Elder’s, Ms Bradley’s and Mr Mehdi’s employment the national minimum wage was $15.51 per hour in accordance with s.287(1) of the Fair Work Act . Further, s.44 of the Fair Work Act provides that an employer must not contravene a provision of the National Employment Standards (NES). Pursuant to s.87(2) of the Fair Work Act (which is contained in the NES), an employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work. Pursuant to s.90(2) of the Fair Work Act (which is also contained in the NES), if, where the employment of an employee ends, the employee has a period of untaken annual leave, New Image must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave. The relevant employees in this case did not take any annual leave during the period of their respective employment with New Image. Upon the termination of their employment, none of them received any payment in lieu of their accrued but untaken annual leave. Moreover, cl.33.3 of the Hair and Beauty Industry Award 2010 provides that during a period of annual leave an employee will receive a loading calculated on the rate of wage payable under the Award. Annual leave loading is payable on accrued annual leave at the rate of 17.5%. Upon the termination of their employment Ms Dodd, Ms Marshall, and Mr Turner were entitled to be paid leave loading on payments for accrued but untaken annual leave. They did not receive payment of that loading. Upon the termination of their employment the employees had accrued annual leave, and were entitled to payments therefor (and in the instances set out below, leave loading), as follows: Employee Hours accrued Entitlement Loading Total Underpayment Daniel Elder 76 $1,178.76 $1,178.76 Jessica Bradley 64.31 $997.41 $997.41 Natalie Towns 9.94 $149.08 $149.08 Muhammad Mehdi 43.85 $680.05 $680.05 Samantha Dodd 76 $1,287.44 $225.30 $1,512.74 Kayne Turner 108.74 $1,842.03 $322.35 $2,164.38 Esther Marshall 80.68 $1,366.67 $239.17 $1,605.84 Total $8,288.26 New Image contravened s.90(2) of the Fair Work Act by failing to pay the employees their accrued annual leave. In failing to comply with s.90(2) of the Fair Work Act , New Image contravened s.44 of the Fair Work Act , a civil remedy provision according to s.539(2) of the Fair Work Act . Further, New Image contravened cl.33.3 of the Hair and Beauty Industry Award 2010 by failing to pay to Ms Dodd, Ms Marshall and Mr Turner their leave loading on accrued but untaken annual leave. In failing to comply with cl.33.3 of the Hair and Beauty Industry Award 2010 New Image contravened s.45 of the Fair Work Act – a civil remedy provision under s.539(2) of the Fair Work Act . Further, the parties agree that by reason of the facts admitted by Mr Bedington and set out in paragraphs 5 and 10 of the Amended Statement of Agreed Facts (set out in paragraph 7 above) and because he received the letter of caution, Mr Bedington was involved in New Image’s contravention as that term is defined in s.550(2)(c) of the Fair Work Act , because he: aided, abetted, counselled or procured; induced; and/or by way of his acts or omissions, was knowingly concerned in or a party to; the contraventions. Mr Bedington is therefore to be treated as having himself contravened ss.44 , 45 and 357 , of the Fair Work Act . The parties agree that an appropriate approach in this case is to group the contraventions together into three groups and to apply a total single penalty in respect of all groups of contravention. The parties recommend that after taking into account a discount of 20% on the possible maximum penalty ($19,800), a penalty of 50% thereof ($7,920) be imposed. That amount is less than the agreed underpayments to the employees. Consideration As I pointed out in Director, Fair Work Building Industry Inspectorate v Supernova Contractors Pty Ltd ACN 099 426 552 & Anor [2012] FMCA 935 this Court reiterated much of the authority on the principles concerning agreed penalty in Carr v CEPU [2007] FMCA 1526 at [6] . Those principles include that: the Court bears ultimate responsibility for penalty, is not bound by the parties’ agreement, and must consider for itself what constitutes an appropriate penalty; determining the quantum of an appropriate penalty is not an exact science, and within a permissible range a particular figure is not necessarily more appropriate than another figure; promoting settlement of litigation (particularly lengthy litigation) is in the public interest, and where the parties agree on facts and penalty, they may present a statement of agreed facts, including a view as to the effect of those facts, and submissions on penalty; the view of the regulatory body is relevant, particularly where the view concerns matters within the regulator’s expertise, but not determinative of penalty; in determining an appropriate penalty the Court will examine all the circumstances, including an agreed statement of facts, and, if appropriate, may act on that statement; and a jointly proposed penalty will not be rejected simply because the Court might have chosen a different figure: it is sufficient if the jointly proposed penalty is “within the permissible range” or “broadly speaking” within that range. More recently, in Fair Work Ombudsman v Bottcher [2010] FMCA 956 O’Sullivan FM observed: 85. In relation to the parties agreed position in NW Frozen Foods Pty Ltd v ACCC [1996] FCA 1134 ; (1996) 71 FCR 285 the Federal Court noted that there is a public interest in promoting settlement of litigation and to this end parties may present to the Court joint submissions as to the recommended penalty to be imposed. 86. There is also the decision in Wells v Locarno Management Pty Ltd [2008] FCA 1034 at 23 where Jessup J said: “The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should as a matter of public policy be regarded as beneficial.” 87. I accept as was said in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at paragraph [53] that: “... (iii) There is a public interest in promoting settlement of litigation... ... (vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.” In Fair Work Ombudsman v Roselands Fruit Market Pty Ltd [2010] FMCA 599 at paragraphs [22] to [26], Driver FM summarised the approach the Court should follow in an application for the imposition of a pecuniary penalty for a contravention of the Workplace Relations Act 1996 (Cth) as follows: 22. The first step for the Court is to identify the separate contraventions involved. Each breach of each separate obligation found in the AFPCS, the NAPSA is a separate contravention of a term of an applicable provision for the purposes of s.719. 23. However, s.719(2) provides for treating multiple breaches, involved in a course of conduct, as a single breach. 24. Secondly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the respondent did. This task is distinct from and in addition to the final application of the "totality principle". 25. Thirdly, the Court will then consider an appropriate penalty to impose in respect of each course of conduct, having regard to all of the circumstances of the case. 26. Fourthly and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the breaches. The Court should apply an "instinctive synthesis" in making this assessment. This is what is known as an application of the "totality principle". The principles applicable to the determination of penalties for contravention of the civil remedy provisions such as those under consideration in this case were summarised by Mowbray FM in Mason v Harrington Corporation Limited [2007] FMCA 7 and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14. In Kelly Tracey J considered authorities relevant to contraventions of the Trade Practices Act 1974 (Cth) as well as those concerning contraventions of Workplace Relations Act 1996 (Cth). In Fair Work Ombudsman v Centennial Financial Services Pty Ltd [2011] FMCA 459 at [32] , Cameron FM set out considerations relevant to the consideration of penalties under the sham contracting provisions of the Workplace Relations Act 1996 as they appeared to his Honour in that case. His Honour suggested that the matters relevant to the determination of the appropriate penalty (in the case before him) included: the nature and extent of the conduct relevant to the breach; the circumstances of the breach; the damage resulting from the breach; whether there had been similar prior conduct by the respondent; whether there was a pattern of conduct or an isolated instance of a breach; the size of the respondents’ business; whether senior managers were involved in the breach; whether there had been contrition, restitution and co-operation with the regulatory authority; whether the respondent had a culture of compliance; and the need for specific and general deterrence. In Supernova Contractors (above) I accepted that those considerations were generally relevant, and that also relevant are: the purpose of the statutory provision that has been breached; the maximum penalty that the legislature has set for the contravention; and whether there has been defiance of the law by the respondent, or genuine misunderstanding as to its operation. The above listed considerations are not exhaustive. The principles are for guidance and do not fetter the Court’s discretion as to the matters that should be considered in setting a penalty: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11] , A & L Silvestry Pty Limited v C onstruction, Forestry, Mining and Energy Union [2008] FCA 466 at [6] . Some of the matters referred to may be more important than others and each of them must be weighed in the ‘ instinctive synthesis’ that is necessarily part of the process of determining penalty: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 and Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 ; (2008) 168 FCR 383 at [60] – [63]. Grouping of contraventions The parties agree that it is open to the Court to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential punishment of Mr Bedington for the same or substantially similar conduct. The Fair Work Ombudsman accepts that some of the contraventions have common elements and this should be taken into account in considering an appropriate penalty to ensure that the Mr Bedington is not punished more than once for the same or substantially similar conduct. The parties consider that grouping is appropriate in this case and they suggest that the Mr Bedington’s contraventions could be grouped into the following three categories: A contravention of s.357 of the Fair Work Act for misrepresenting to each of the employees that their contract of employment was a contract for services under which each of them was to perform work as an independent contractor. Although there are seven employees involved and each occasion of misrepresentation is a contravention of the Fair Work Act , it is said that this series of contraventions should be treated as one arising out of the same course of conduct pursuant to s.557(1) of the Fair Work Act and should attract a maximum penalty of $6,600; A contravention of s.44 of the Fair Work Act 2009 (by virtue of failing to pay the employees their accrued annual leave at termination pursuant to s.90 of the Fair Work Act ) (maximum penalty $6,600); and In contravention of s.45 of the Fair Work Act (by virtue of failing to pay Ms Dodd, Ms Marshall and Mr Turner their accrued annual leave loading at termination pursuant to cl.33.3 of the Award) (maximum penalty $6,600). In her written submissions, the solicitor for Mr Bedington argues that the categories could be collapsed into two and the second and third categories set out above could be dealt with as one. Neither party’s submissions seek to draw a distinction between the contraventions alleged and admitted, and the process of assessing a penalty for those contraventions. As I have just set out, the Fair Work Ombudsman argues that the first category of contraventions arising out of the misrepresentations as to the nature of the relevant engagements should be seen as a single contravention of s.357 of the Fair Work Act . The orders that the parties agree the Court should make bear that out. But in my view, that approach is erroneous. Relevantly s.557(1) of the Fair Work Act is in the following terms: 557 Course of conduct (1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if: (a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person. Section 357 of the Fair Work Act is not specified in s.557(2) of the Fair Work Act . Accordingly, s.557(1) can have no application to the multiple contraventions of s.357 of the Fair Work Act . Section 357 of the Fair Work Act is in the following terms: 357 Misrepresenting employment as independent contracting arrangement (1) A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by New Image is a contract for services under which the individual performs, or would perform, work as an independent contractor. Note: This subsection is a civil remedy provision (see Part 4 - 1 ). (2) Subsection (1) does not apply if New Image proves that, when the representation was made, the employer: (a) did not know; and (b) was not reckless as to whether; the contract was a contract of employment rather than a contract for services. Assuming for the moment that in respect of each of the seven relevant employees there was only one misrepresentation (made in writing by the letter of offer each received), there have been seven contraventions. For the purposes of making a declaration about the relevant contraventions (as the parties seek), there is no warrant in the Fair Work Act to simply declare that New Image contravened s.357 of the Fair Work Act by misrepresenting to each of the employees that the contract of employment under which each of them was employed was a contract for services under which each of them was to perform work as an independent contractor. A declaration in such terms would do little to “ clearly identify the contravening conduct ” as the Fair Work Ombudsman submits. Having regard to the allegations in paragraphs 32 and 33 of the statement of claim filed on 30 April, 2012 it is apparent that there are at a minimum seven contraventions and perhaps as many as 18 contraventions of s.357 of the Fair Work Act alleged. It is apparent from the Amended Statement of Agreed Facts that the allegations in paragraphs 32 and 33 of the statement of claim are admitted by Mr Bedington. For the purposes of identifying the relevant contraventions, in my view it is not open to treat all of the alleged contraventions of s.357 of the Fair Work Act as one contravention. That says nothing about how the Court approaches the task of assessing the penalty for the identified breaches, but it is necessary, as a first step, to identify the relevant contraventions. Section 557(2) of the Fair Work Act specifies the civil remedy provisions to which s.557(1) applies. Sections 44 and 45 of the Fair Work Act are specified in s.557(2) , and so, it is permissible to treat the multiple contraventions of ss.44 and 45 of the Act (non-payment of annual leave and, where appropriate annual leave loading, for each of the employees – a total of 10 possible contraventions) as single contraventions of each section. Each of those contraventions was committed by the same person and, I accept, arose out of a course of conduct by that same person. They should be taken to constitute a single contravention of each of ss.44 and 45 of the Fair Work Act . However, in my view it is not appropriate to collapse the breaches of s.44 and s. 45 of the Fair Work Act together as a single contravention as Mr Bedington argues. By its terms, s.557(1) applies to 2 or more contraventions of a civil remedy provision. In my view, that means the same civil remedy provision. Sections 44 and 45 are separate and distinct civil remedy provisions. Section 539(2) of the Fair Work Act prescribes that the maximum penalty that may be imposed by this Court for a contravention of ss.44 , 45 and 357 of the Fair Work Act is 60 penalty units. Section 546(2) of the Fair Work Act prescribes that a pecuniary penalty imposed by the Court on an individual must not be more than the maximum number of penalty units provided for in s.539(2). A penalty unit is equivalent to $110.00. Therefore, the maximum penalty that may be imposed by the Court on Mr Bedington for each contravention of the Fair Work Act is $6,600. In my view, the maximum penalties that might be imposed upon Mr Bedington are as follows: Contravention Employee Paragraphs of statement of claim Maximum Penalty s.357 Daniel Elder 32 33a) $6,600 $6,600 Jessica Bradley 32 $6,600 Natalie Towns 32 33a) 33c) 33d) $6,600 $6,600 $6,600 $6,600 Muhammad Mehdi 32 33a) 33e) $6,600 $6,600 $6,600 Samantha Dodd 32 33a) $6,600 $6,600 Kayne Turner 32 33a) 33f) $6,600 $6,600 $6,600 Esther Marshall 32 33b) 33c) $6,600 $6,600 $6,600 s.44 All employees $6,600 s.45 All employees $6,600 Total $132,000 To the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention or course of conduct. It is open to the Court to group separate contraventions together, where various contraventions may be said to overlap with each other, and involve potential punishment of Mr Bedington for the same or substantially similar conduct. The penalties imposed by the Court should be an appropriate response to what Mr Bedington did. This task is distinct from and in addition to the final application of the “totality principle” (see Fair Work Ombudsman v Roselands Fruit Market Pty Ltd (above)). The parties submit that I should group the contraventions of s.357 together as one contravention. As I have pointed out above, in my view, s.557(1) of the Act does not permit such a course. Nonetheless, it is “ open to the Court in an appropriate case to take into account, as a matter of discretion, the circumstance that the same acts or omissions had resulted in multiple contraventions by multiple breaches of terms cast in similar language in each of the multiple agreements by imposing a lesser penalty or even no penalty in respect of breaches of some terms, while imposing a substantial penalty in respect of breaches of other terms ” ( QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150). In my view, to treat all of the breaches of s.357 of the Act as arising out of the same course of conduct would be to disregard the fact that a separate course of offending conduct occurred in respect of each employee. As a generality it might be said that the conduct in respect of each employee was the same of the same character, but that does nothing to recognise that the conduct was repeated multiple times in respect of each employee, seemingly on different occasions and in different contexts. The multiple misrepresentations said to have been made during the recruitment of each employee to him or her might properly be treated as a single contravention. But in my view it would be erroneous to treat as a single contravention all of the misrepresentations to all of the employees irrespective of the individual circumstances attendant upon the recruitment of each employee. The contraventions in this application as they relate to separate employees do not arise out of the same acts or omissions of New Image or Mr Bedington. The contraventions of s.357 of the Act in respect of each employee should be treated separately. As was pointed out by Burnett FM in Fair Work Ombudsman v Contracting Plus Pty Ltd [2011] FMCA 191 at [80] – [81] 80. In this case it is agreed between the applicant and respondents that there have been five separate contraventions of s.900(1) of the Act in respect of each of the five employees that I have earlier identified. However, while it is accepted the Court retains a discretion to consider whether the conduct giving rise to the five identified breaches stem from the course of conduct, the applicant submitted that the better view is that each of the breaches amounts to a separate and distinct course of conduct. I think that is appropriate in this case. In particular, I consider it appropriate because in this instance each individual was engaged on different terms and conditions at different times and involved the respondents’ exercise of distinct and discrete powers in relation to their engagement. 81. In my view, the breaches clearly did not stem from one course of conduct. It may have been different if each individual had been engaged at the same time or all on the same terms and conditions. That might invite an inference that there was one course of conduct. However, in this instance the evidence clearly demonstrates that on each occasion the respondent turned its mind discretely to the issue of engagement and in each instance, it seems to me, each engagement constituted a distinct and separate contravention. On that basis, I am satisfied that each of the five sham contracting provisions should be considered discretely (my emphasis) For similar reasons expressed by Burnett FM, I shall group the contraventions of s.357 of the Act into seven groups being one grouping for each employee. Penalty I accept that the contraventions in this matter represent a failure to provide basic and important entitlements under workplace relations legislation. The purpose of the legislation is to provide a safety net which ensures adequate minimum entitlements to employees, particularly those who are vulnerable or on low income roles. The legislation is also designed to provide an even playing field for all employers with regard to employment costs. I accept that the contraventions of these fundamental entitlements undermine the workplace relations regime as a whole and demonstrate a disregard for the statutory obligations cast upon New Image and Mr Bedington who controlled it. The parties agree that New Image and Mr Bedington were advised by letter dated 24 August, 2010 that the Fair Work Ombudsman had determined a former worker to be an employee rather than an independent contractor and that an audit would be scheduled to ensure corrective action has been taken. On 5 April 2011, the Fair Work Ombudsman issued a letter to New Image advising that it had been selected for auditing in relation to sham contracting to ensure compliance with Commonwealth workplace laws. Mr Bedington’s conduct in contravention of the Fair Work Act spanned a period of approximately 11 months (between about 20 January, 2011 and 1 December, 2011) and involved seven employees. The sham arrangements were in place for the entire period of each of the respective employees’ employment. I accept the Fair Work Ombudsman’s submission that it is likely that the contraventions would have continued had the employees’ employment with New Image not ceased. Mr Bedington has received a benefit from the underpayment of entitlements to the employees for a significant period of time. The underpayment has not been rectified and New Image is now in liquidation. I accept the Fair Work Ombudsman’s submission that the underpayment of $8,288.26 that arose from the contraventions is comparatively significant in the context of the employees’ relatively short period of employment. Some of the employees were relatively young when they were engaged by New Image. I have set out their ages above. Mr Mehdi was a Pakistani national and held a subclass 485 Skilled – Graduate (Temporary) Visa which allowed him to work in Australia. I accept that some of the employees were vulnerable by reason of their age or background and that this is a significant factor in determining penalty: Workplace Ombudsman v Saya Cleaning Ply Ltd [2009] FMCA 38. Mr Bedington was responsible for day to day management, direction and control of New Image’s operations and business. He was responsible for determining the terms and conditions upon which workers were engaged in the business and responsible for implementing a system of work whereby workers were engaged in the business as independent contractors. I accept that Mr Bedington’s conduct was intrinsically linked to New Image’s contraventions of the Act. I have already recorded that in the context of the employees’ periods of employment with New Age, the underpayment of entitlements is of some significance. The underpaid amounts remain outstanding and the employees have been without the benefit of their entitlements for a considerable period. As a result of previous contraventions identified by the Fair Work Ombudsman, the letter dated 24 August, 2010 formally cautioned New Image and Mr Bedington to undertake corrective action to ensure they did not continue to engage workers as independent contractors when their working arrangements were more properly categorised as employment. The contraventions which are subject to these proceedings occurred after this date. The parties have proceeded on the basis that New Image was, at the relevant times, a small business. It is now in liquidation. Mr Bedington has had the opportunity to file submissions and evidence for the purposes of this hearing, but no evidence has been placed before the Court on this issue. Nonetheless, the factor is of little significance. Employees of small concerns are as much entitled to the protections of the Fair Work Act as employees of large concerns. There is no evidence before me of the financial circumstances of Mr Bedington. I am driven to the conclusion that by reason of the letter dated 24 August, 2010 New Image knew that when the representations were made to the employees the misrepresentations were false. At the very least, New Image and Mr Bedington had been put on notice by the Fair Work Ombudsman that the engagement arrangements were not likely to withstand scrutiny. To continue in the same way in light of that information was at the very least reckless as to whether the contracts were contracts of employment rather than contracts for services. At the time of the contraventions, Mr Bedington was the sole director and secretary of New Image and majority shareholder of Bryna Pty Ltd, the sole shareholder of New Image. I accept that he was the “directing mind and will” of New Image. Mr Bedington has admitted to his involvement in New Image’s contraventions of the Act, as alleged by the Fair Work Ombudsman in the Statement of Claim. There is no evidence before the Court that the contraventions were attributable to any other person or agent. I accept that the involvement of Mr Bedington equates to involvement by senior management. The cases indicate that a discount on the penalty to be imposed is appropriate where there has been co-operation and admissions early in the course of an investigation or soon after the commencement of proceedings. Such discounts range as high as 30% in some cases. However, consistent with the decision in Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 ; (2008) 168 FCR 383 at [74] - [76] : [74] It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing — that would discriminate against a person who exercised a right to contest the allegations. A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice. Remorse and an acceptance of responsibility also merit consideration where they are shown. [75] A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity, although, as was indicated in Cameron (at [23]–[24]), there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates. [76] As Branson J has pointed out (see Alfred v Walter Construction Group Ltd [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron , that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice. The Fair Work Ombudsman acknowledges that New Image and Mr Bedington did partially cooperate with the Fair Work Inspectors during the investigation in this matter. The Fair Work Ombudsman also acknowledges that Mr Bedington has considerably shortened and assisted the litigation process, and reduced costs to the public purse, by admitting liability and reaching agreement about the facts to be placed before the Court. The Fair Work Ombudsman submits that Mr Bedington is entitled to a discount in the penalty to be awarded as a result of his: co-operation in the Fair Work Ombudsman’s audit of the employees and in the conduct of these proceedings; and early acknowledgement of liability and entering into the statement of agreed facts, which has shortened and assisted the litigation process and reduced the costs to the public purse. However, Mr Bedington has taken no corrective action and the underpayments remain outstanding. There is no evidence of genuine contrition on the part of Mr Bedington, other than what little can be inferred from his agreement on liability and penalty. It is not clear to me, either from the material relied upon by Mr Bedington, or the submissions made on his behalf that it can be fairly said that his admission of liability indicates an acceptance of wrongdoing and a suitable and credible expression of regret or has indicated a willingness to facilitate the course of justice. In the circumstances, I am of the view that a modest discount of 10% is appropriate in this case to reflect the co-operation that Mr Bedington has afforded the Fair Work Ombudsman in its investigations. It is well-established that the need for specific and general deterrence is a factor that is relevant to the imposition of a penalty under the Act. It is submitted by the Fair Work Ombudsman that there is a need for both specific and general deterrence in this matter. The role of general deterrence in determining the appropriate penalty is illustrated by the comments of Lander J in Ponzio v B & P Caelli Constructions Ply Ltd [2007] FCAFC 65 ; (2007) 158 FCR 543 at [93] : In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 1. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. I accept the submissions of the Fair Work Ombudsman that it is appropriate for the Court to send a clear message to persons in Mr Bedington’s position and industry in general that contraventions of the Fair Work Act are serious and that persons bound by obligations imposed by the Act need to take them seriously. The Fair Work Ombudsman also submits that general deterrence is important in the present case as the contraventions involved 7 employees, some of who were vulnerable by reason of their age or background. It is particularly important that the Court impose a penalty that demonstrates to employers of such workers the importance of complying with Commonwealth workplace laws. Regardless of the size of New Image and its financial position, the law should mark its disapproval of the conduct in question, and set a penalty which serves as a warning to others. I accept that there is a need to send a message to the community at large, and small employers particularly, that the correct entitlements for employees must be paid and that steps must be taken by employers (of all sizes) to properly ascertain and comply with the Fair Work Act and its provisions relating to sham contracting and minimum entitlements. It is difficult to understand, therefore, how such a message is to be sent when the penalty agreed between the parties falls below the level of underpayment brought about by the contraventions of s.44 and 45 of the Act. The underpayment is $8,288.26 and yet the agreed penalty is only $7,920.00. In my view, an entirely inappropriate message is conveyed by imposing a penalty that is less than the underpayments, in circumstances where the underpayments remain outstanding and there is no suggestion that they will be remedied. If I imposed the penalty agreed between the parties the message would seem to be that it is more cost effective to contravene the Act by underpaying employees and meeting a pecuniary penalty than to comply with the obligations imposed by the Act. In my view, in this case the level of underpayment marks out the very bottom of the range of an acceptable penalty. It follows that the agreed penalty falls outside of that range. Lest it be thought that I am attempting to enunciate any general principle that a pecuniary penalty must always be higher than any proved underpayments, I make it clear that I am not attempting to do so. In my judgment, an appropriate penalty must fall within an acceptable range which, on the facts of this case, must have as its minimum the level of admitted underpayment. Given that New Image is no longer trading or employing other staff at present, the Fair Work Ombudsman submits that the need for specific deterrence in this matter is not high. However, Mr Bedington continues to be a sole director of another company involved in the photographic services business that employs others in its business. Specific deterrence is therefore of some relevance especially in light of the caution issued by the Fair Work Ombudsman to Mr Bedington prior to the relevant conduct that has led to these proceedings. The Penalties The Fair Work Ombudsman submits that a mid-range penalty of 50% of the maximum is appropriate in the circumstances, discounted by a further 20% for Mr Bedington’s co-operation. By dint of the agreement on penalty, Mr Bedington must agree with those propositions. In my view the more appropriate starting point is a mid–range penalty of 40%, but in my view, the discount to be applied is 10% so that a penalty of 30% of the maximum is appropriate. The seven contraventions of s.357 of the Act attract a penalty of 30% of the maximum available for each contravention. That is a penalty of $1,980 for each of the seven contraventions. In respect of the contraventions of s.44 and 45 of the Act, the penalty should be fixed at 30% of the maximum or $1,980 each. The aggregate penalty for the breaches of s.357 of the Act is $13,860. Aggregated with the penalties for the other two breaches, the total penalty is $17,820. Having regard to the totality principle I am satisfied that the aggregate penalty is just and appropriate in all the circumstances. In Kelly (supra) , Tracey J said at [30]: Another factor which must be taken into account in fixing the pecuniary penalties for multiple breaches of statutory stipulations is the totality principle. The principle is designed to ensure that the aggregate of the penalties imposed is not such as to be oppressive or crushing. Different views have been expressed as to the manner in which the principle ought to be applied. On one view, the starting point should be the determination of an appropriate total penalty. That figure would then be divided by the number of breaches to produce a penalty for each breach. The orthodox position, however, which I consider should be adopted is that the starting point is the determination of the appropriate penalties for each contravention of the statutory norm. The aggregate figure is then considered, with a view to ensuring that it is an appropriate response to the conduct which led to the breaches. In my view the total penalty is appropriate in the circumstances. It represents a just and appropriate response to the conduct as a whole, involving as it does contravening conduct in respect of seven employees over a period of time and a significant underpayment to those employees. There is nothing in the evidence to suggest that the penalty is likely to be crushing. I have considered the decision of Jessup J in Wells v Locarno Management Pty Ltd [2008] FCA 1034 at [23] where his Honour said: [23] The court is not bound by the agreement of the parties as to the level of penalty which should be imposed in a case such as the present. However, the court will not depart from an agreed figure merely because it might otherwise have been disposed to award some other figure. The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should, as a matter of public policy, be regarded as beneficial. Only where the agreed penalty falls outside the permissible range should the court depart from the figure agreed by the parties. In this context, the permissible range is the range which would be permitted by the court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive. See NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134 ; (1996) 71 FCR 285 at 290–91; Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 ; [2004] ATPR 41-993 , [53]; Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 ; (2007) 158 FCR 543 at 565; and Hills v Sutton [2007] FCA 2033 ; (2007) 169 IR 327 at 329. My conclusion however is that the agreed penalty is manifestly inadequate and outside of the permissible range, largely because it was calculated by the parties on the basis that the breaches of s.357 of the Act should appropriately be treated as one contravention. For the reasons I have expressed above, I disagree with that view. Finally, by supplementary written submission delivered on 27 November, 2012, Mr Bedington submits that if the Court is not prepared to assess the penalty in the sum agreed by the parties, he seeks to withdraw from the agreement reached about the disposition of the application. He bases his argument upon a contractual right to do so arising from an innocent misrepresentation or common mistake between the parties. Essentially he argues that he agreed to compromise the proceedings because the Fair Work Ombudsman represented that the contraventions could be dealt with in three groups and that the maximum penalty that could be imposed was $19,800. He says that the representations proved to be false. Alternatively he says that the parties made a common mistake of law as to how the contraventions could be dealt with. In my view neither argument would lead to the conclusion that Mr Bedington could withdraw from the agreement that the parties reached on the facts of the matter. As the passage from Wells v Locarno Management Pty Ltd (above) commences: “ The court is not bound by the agreement of the parties as to the level of penalty which should be imposed in a case such as the present ”. It is not suggested that either party was unaware of that proposition. Indeed their principle submissions on penalty are alive to that proposition. In those circumstances Mr Bedington must have made some assessment of the likelihood of the Court accepting that the agreed penalty was appropriate. As it turns out, his judgment on that issue was awry. To the extent that Mr Bedington’s submissions filed on 27 November, 2012 represent an application to withdraw from the agreement, that application is refused. Orders are sought that there be payments of the penalty, on a pro rata basis, made to the employees. I make an order in those terms and any balance after payment to the employees shall be paid to the Commonwealth. I direct the sum be paid within 28 days. I certify that the preceding 113113one hundred113113thirteenfiveone hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of Jarrett FM Associate: Date: 29 November 2012