WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT CITATION : 2021 WAIRC 00636 CORAM :Industrial Magistrate J. Hawkins HEARD : Wednesday, 27 October 2021 DELIVERED : Friday, 17 December 2021 FILE NO. : M 171 OF 2021 BETWEEN : Jillian Denise Dixon, Department of Mines, Industry Regulation and Safety Claimant AND Martin Long Respondent CatchWords : Industrial Law – Assessment of penalty for contravention of s 102(2)(a) of the Industrial Relations Act 1979 (WA) Legislation : Industrial Relations Act 1979 (WA) Magistrates Court (Civil Proceedings) Act 2004 (WA) Instruments : Restaurant, Tearoom and Catering Workers’ Award 1979 (WA) Case(s) referred to in reasons: : Callan v Smith [2021] WAIRC 216 Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563 Commissioner of Taxation v Arnold (No 2) [2015] FCA 34 Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Result : Penalty imposed Representation: Claimant : Ms H. Kerr (of counsel) from the Department of Mines, Industry Regulation and Safety Respondent : Self-represented === REASONS FOR DECISION === Introduction ¶1 Jillian Denise Dixon (the Claimant) an industrial inspector of the Department of Mines, Industry Regulation and Safety (DMIRS) claimed against Mr Martin Long (the Respondent) payment of a penalty pursuant to s 83E(1)(a) of the Industrial Relations Act 1979 (WA) (the Act) for a contravention of s 102 of the Act. The maximum penalty pursuant to s 83E(1)(a) of the Act for such contravention is $5,000. ¶2 The claim alleged that the Respondent was in partnership with Ms Jitsopin Long (Ms Long) and that partnership held the business name of ‘Ginreab Thai’ and operated a restaurant in Broome (the Restaurant). ¶3 DMIRS carried out an investigation to ascertain whether the Respondent and Ms Long had observed the provisions of the Act and the Restaurant, Tearoom and Catering Workers’ Award 1979 (WA) (the Award) in relation to employees of the Restaurant. ¶4 As a result of that investigation, DMIRS provided the Respondent with its findings. The findings included confirmation that the Award applied to the Respondent and Ms Long and that the annualised salary paid to an employee, Mr Narongrith Chukaeo (Mr Chukaeo), was not sufficient to cover his minimum award entitlements. The Respondent and Ms Long were given time by DMIRS to rectify these alleged breaches. ¶5 On 3 March 2021, the Respondent emailed the Claimant advising an agreement had been reached with Mr Chukaeo and ‘that only half of the identified underpayment would be paid to him’. Following this, on 16 March 2021, the Respondent emailed the Claimant the signed settlement agreement and evidence of payment to Mr Chukaeo of the settlement sum. ¶6 As a result, the Claimant’s investigation was closed. The Claimant was satisfied that the Respondent had voluntarily rectified the underpayment to Mr Chukaeo according to the agreement reached with him. ¶7 However, on 12 April 2021, ‘Mr Chukaeo advised the Claimant that the Respondent had asked him to repay the agreement settlement sum’, being $2,185.05. Despite this request, Mr Chukaeo did not repay the agreed settlement sum to the Respondent. ¶8 The claim, therefore, alleged that the Respondent’s email of 16 March 2021 wilfully misled the Claimant and inter alia was sent in order to mislead the Claimant to assume the Respondent had in fact complied with the settlement agreement between him and Mr Chukaeo. The Claimant alleged that this conduct amounted to an obstruction pursuant to s 102(2)(a) of the Act, and sought payment of a penalty. ¶9 The Respondent wholly admitted the claim and consented to the orders sought. ¶10 The matter was the subject of a penalty hearing on 27 October 2021. Both parties made oral submissions. The Claimant also relied on written submissions dated 8 October 2021. Submissions On Penalty From The Claimant ¶11 The Claimant referred to the particulars of claim in respect to the contravening conduct. ¶12 The Claimant says that the conduct, which is the subject of this claim, was done by the Respondent, despite his obligations to ensure that employees received their employment entitlements. ¶13 The Claimant submits that the provision of accurate information from employers is essential to the success of the enforcement regime under the Act. ¶14 The Claimant points to the extent of the communication between the Respondent, the Claimant and Mr Chukaeo to establish that the Respondents conduct was wilfully misleading. ¶15 The nature of the conduct, the Claimant submits falls within what has been described as a ‘cash back’ arrangement. ¶16 Nonetheless, the Claimant says there has been no similar previous conduct by the Respondent. ¶17 However, the Claimant emphasised the need for both specific and general deterrence given that conduct was deliberate and involved elements of deceit. The Claimant points to the conduct only being discovered as a result of Mr Chukaeos’ contact with DMIRS as to whether he was required to repay the settlement sum to the Respondent. ¶18 Due to what the Claimant says was the deliberate and deceitful conduct of the Respondent, in an effort to evade or circumvent the proper enforcement of the Act and the Award, the Claimant submits that a penalty at the higher end of the scale is warranted. Submissions on Penalty from Respondent ¶19 In his oral submissions, the Respondent acknowledged the contravention and accepted the seriousness of his actions. His reasoning for behaving as he did was largely due to his view that Mr Chukaeo owed the partnership far more than the amount of his entitlements in respect to a separate board and lodging arrangement. ¶20 Nonetheless, the Respondent made clear that he had learnt from the experience and expressed his thanks to the inspectors of DMIRS for the guidance they have given him. The Respondent confirmed the Restaurant continues to operate and he has the financial capacity to pay. Determination ¶21 Schedule 1 and sch 2 attached set out the jurisdiction practice and procedure of the Western Australian Industrial Magistrates Court (IMC), the relevant legislation and authorities concerning pecuniary penalties. As stated in sch 2, a non-exhaustive range of considerations apply in determining whether particular conduct calls for the imposition of a penalty and if so the amount. Generally, those non-exhaustive considerations are: (a) The nature and extent of the conduct which led to the breaches; (b) Circumstances in which the conduct took place; (c) The nature and extent of any loss or damage sustained as a result of the breaches; (d) Whether there has been any similar previous conduct by the Respondent; (e) Whether the breaches are properly distinct or arose out of one course of conduct; (f) The size of the business involved; (g) Whether or not the breaches were deliberate; (h) Whether senior management was involved in the breaches; (i) Whether the party committing the breach had exhibited contrition; (j) Whether the party committing the breach has taken corrective action; (k) Whether the party committing the breach had cooperated with enforcement authorities; and (l) The need for specific and general deterrence. ¶22 Further, as found in Callan v Smith regard must be given to the maximum which serves as ‘a yard stick’ against which the assessment of penalties is generally to proceed. Nature And Extent Of Conduct And The Circumstances In Which It Occurred ¶23 The contravention consisted of the Respondent deliberately advising the Claimant that an agreement had been reached and that the agreed sum had been paid to Mr Chukaeo. I am satisfied that the Respondent’s conduct was intended to and did mislead the Claimant. The behaviour arose from the Respondent’s misguided understanding of his obligations as an employer. Although the conduct can be characterised as a form of ‘cash back’ arrangement, there is no evidence of a widespread established business model seeking to circumvent employees’ entitlements. This conduct appears to have occurred once only and was short-lived. Nonetheless, the conduct clearly was serious. ¶24 Given these factors, the penalty for the contravention lies in the mid to high range. Nature And Extent Of Any Loss Or Damage Sustained ¶25 Although there is no quantum to any loss or damage suffered by the Claimant, the Respondent’s conduct in seeking to mislead, impacts upon DMIRS’ ability to properly enforce the obligations under the Act, including ensuring employees are paid their full entitlements. This factor indicates a penalty in the mid to high range. Similar Previous Conduct ¶26 There is no information which shows that the Respondent has previously contravened a civil penalty provision under the Act. This factor indicates a penalty where the starting point is at the lower end of the scale. The Size of the Business Enterprise Involved ¶27 This is not a factor that can be ascertained as there is little or no information before the Court as to the extent of the respondent’s business. Further, as provided in Callan v Smith, the Full Bench of the Western Australian Industrial Relation Commission found that the size of the business should not weigh in favour of diminishing penalty that should otherwise be assessed. Deliberateness Of Contraventions ¶28 This is a not neutral factor. Clearly on the basis of the claim, as accepted by the Respondent, the contravention was deliberate. The Respondent through various written communications advised the Claimant of the settlement agreement and the intention to pay the settlement sum. However, it was the intention of the Respondent to require Mr Chukaeo to repay the settlement sum. This factor, therefore, lies in the mid to high range. Corrective Action, Contrition And Co-Operation ¶29 The Respondent has admitted the contravention and shown contrition. Further, the Respondent has made clear that he will not behave in a similar manner again. These factors lies in the lower end of the scale. Specific And General Deterrence ¶30 The Respondent does continue to trade and accordingly a component for specific deterrence is required in respect to the possibility of continuing contraventions of the Act. ¶31 Like all contraventions, general deterrence is an important factor. A civil penalty promotes the public interest in compliance with the law as found in Callan v Smith. It is accepted that a penalty should include a significant component for general deterrence and should constitute a significant element in the assessment of penalty to deter other employers from similar conduct. This is especially so where the contravention sought to wilfully mislead DMIRS and affect the Claimant’s ability to properly enforce the Act and the Award. These factors lie in the high range. Financial Position Of The Respondent ¶32 The financial position of a person against whom an order is made may be relevant. In this case, the Respondent has accepted that he has the capacity to pay, however, as pointed out in Commissioner of Taxation v Arnold (No 2), in most cases this factor will not carry great weight in the assessment of penalty. Assessment Of Penalty ¶33 Having considered the above factors, I consider the appropriate penalty is $2,800. Costs ¶34 In addition to that penalty, applying the decision of Callum v Smith, costs sought by the Claimant of $187 by way of disbursements should also be awarded. Orders ¶35 It is therefore ordered as follows: The Respondent shall pay to the Claimant a penalty of $2,800. The Respondent shall pay to the Claimant costs of $187. J. Hawkins INDUSTRIAL MAGISTRATE ¶36 Schedule 1 – Jurisdiction and Procedure of the Western Australian Industrial Magistrates Court ¶37 [1] The standard of proof to be applied in ‘determining whether there has been a contravention of a civil penalty provision is the standard observed in civil proceedings’: s 83E(8) of the Act. ¶38 [2] The powers, practice and procedure of the IMC in these proceedings are the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): s 81CA(2) of the Act. Accordingly, in exercising the jurisdiction to impose a penalty, the IMC is exercising a civil jurisdiction and the standard of proof is therefore on the balance of probabilities. When in these reasons I say that I am satisfied, that means I am satisfied on the balance of probabilities. ¶39 Schedule 2 – Pecuniary Penalty Orders And Section 83E(1) of the Industrial Relations Act 1979 (WA) ¶40 [1] Section 83E(1) of the Act provides that the IMC may impose a penalty on a person not exceeding $5,000 in the case of an employer, organisation or association and $1,000 in any other case, if the Court is satisfied a contravention of an a civil penalty provision has occurred. The Act allows the Court to order a penalty be paid directly to a ‘person directly affected by the conduct to which the contravention relates’ or to the applicant or Treasurer: s 83F(2) of the Act. ¶41 [2] The purpose served by penalties was described by Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 [388] in the following terms: ¶42 In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose. (citations omitted) ¶43 [3] In Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 [14], Tracey J adopted the following ‘non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ which had been set out by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7: The nature and extent of the conduct which led to the breaches. The circumstances in which that conduct took place. The nature and extent of any loss or damage sustained as a result of the breaches. Whether there had been any similar previous conduct by the respondent. Whether the breaches were properly distinct or arose out of the one course of conduct. The size of the business enterprise involved. Whether or not the breaches were deliberate. Whether senior management was involved in the breaches. Whether the party committing the breach had exhibited contrition. Whether the party committing the breach had taken corrective action. Whether the party committing the breach had cooperated with the enforcement authorities. The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and The need for specific and general deterrence. ¶44 [4] The list is not ‘a rigid catalogue of matters for attention. At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations’: Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 [91]. ¶45 [5] Applying the principles set out in Callan v Smith [2021] WAIRC 216, when properly construed, s 83E(1) of the Act prescribes the maximum penalty that is to be applied to any single contravention of a civil penalty provision. ¶46 [6] ‘Multiple contraventions’ may occur because the contravening conduct done by an employer: resulted in multiple contraventions of a single civil penalty provision or resulted in the contravention of multiple civil penalty provisions; was repeated; was done with respect to multiple employees. ¶47 [7] Where multiple contraventions occur, it may be necessary to consider the principles in relation to course of conduct or one transaction rule and consider whether it is appropriate to make an adjustment by way of a reduction for each contravention: Callan v Smith [111]. ¶48 [8] The totality of the penalty must be re-assessed in light of the totality of the offending behaviour. If the resulting penalty is disproportionately harsh, it may be necessary to reduce the penalty for individual contraventions: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 [47]-[52], Callan v Smith [112]. ¶49 [9] The task of fixing the penalty is a process of ‘instinctive synthesis’ having regard to the circumstances of the case and the need to maintain public confidence in the statutory regime. ¶50 [10] In his paper on civil penalty contraventions delivered to an ‘Employment Law Symposium: Your Guide to Workplace Law 2011’ Law Society of Western Australia (30 November 2011), Gilmour J of the Federal Court of Australia observed that: ¶51 Determining penalties is not a matter of precedent. There is no tariff. Regard must be had in fixing a penalty to the individual circumstances of a case and should not be determined by a line by line comparison with another case. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 Buchanan J said: ¶52 ‘The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.’ ¶53 This proposition was supported in ABCC v CFMEU (No.2) (2010) 199 IR 373 at [11] per Barker J and upheld by the Full Court on appeal in McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29.