FEDERAL COURT OF AUSTRALIA Mayberry v Kijani Investments Pty Ltd as trustee for The Dawe Investments Trust Subway Wallsend trading as Subway [2011] FCA 1238 Citation: Mayberry v Kijani Investments Pty Ltd as trustee for The Dawe Investments Trust Subway Wallsend trading as Subway [2011] FCA 1238 Parties: LEE MAYBERRY v KIJANI INVESTMENTS PTY LTD ATF THE DAWE INVESTMENTS TRUST SUBWAY WALLSEND T/AS SUBWAY File number: NSD 1581 of 2011 Judge: KATZMANN J Date of judgment: 28 October 2011 Catchwords: INDUSTRIAL LAW – Unfair dismissal – failure to comply with orders of Fair Work Australia – breach of civil remedy provision – consideration of factors relevant to penalty – no appearance by respondent Legislation: Fair Work Act 2009 (Cth) ss 405, 539, 540(1)(a), 545(1), 547(2), 570(2), 546(2)(b) Federal Court Rules 2011 (Cth) rr 30.21(1)(b), 39.06 Cases cited: Fair Workplace Ombudsmen v Golden Maple Proprietary Limited Pty Ltd (2009) 186 IR 211 Flattery v The Italian Eatery (trading as Zeffirelli's Pizza Restaurant) (2007) 163 IR 14 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 Date of hearing: 28 October 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: Ms G Wilkinson Solicitor for the Applicant: McDonald Johnson Lawyers Counsel for the Respondent: The respondent did not appear. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1581 of 2011 BETWEEN: LEE MAYBERRY Applicant AND: KIJANI INVESTMENTS PTY LTD ATF THE DAWE INVESTMENTS TRUST SUBWAY WALLSEND T/AS SUBWAY Respondent JUDGE: KATZMANN J DATE OF ORDER: 28 OCTOBER 2011 WHERE MADE: SYDNEY THE COURT DECLARES THAT: the respondent has breached the civil remedy provision contained in s 405 of the Fair Work Act 2009 (Cth) in that it has failed to comply with an order made by Fair Work Australia on 14 July 2011; AND THE COURT ORDERS THAT THE RESPONDENT: 1. comply with the order of Fair Work Australia by forthwith paying to the applicant the amount of $8,789.23; 2. pay interest on that amount at the rate prescribed under r 39.06 of the Federal Court Rules 2011; 3. pay to the applicant a penalty of $11,000; and 4. pay the applicant's costs in the sum of $6,000. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1581 of 2011 BETWEEN: LEE MAYBERRY Applicant AND: KIJANI INVESTMENTS PTY LTD ATF THE DAWE INVESTMENTS TRUST SUBWAY WALLSEND T/AS SUBWAY Respondent JUDGE: KATZMANN J DATE: 28 OCTOBER 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Lee Mayberry, the applicant in this proceeding, is 21 years old. At the age of 16, while still at school, she started working for the respondent, first as a casual, then as a trainee, and finally as a permanent part-time employee. The respondent ("Kijani") is a company through which its directors, Jason and Nicole Dawe, who are husband and wife, operate a fast food business. After several inquiries about holiday pay, without warning or notice, Ms Dawe dismissed Ms Mayberry for "wilful misconduct and neglect of duty". The reason she gave was that Ms Mayberry had used company resources to make a cardboard car. 2 Ms Mayberry complained to Fair Work Australia ("FWA") that her dismissal was unfair. Kijani defended its decision. 3 On 14 July 2011 a commissioner of FWA found that Ms Mayberry did not engage in any conduct warranting dismissal, let alone summary dismissal. Moreover, he also found that the manner in which she was dismissed was procedurally unfair: he said that she should have been afforded an opportunity to defend herself. He held that Kijani's conduct was harsh, unjust and unreasonable, and ordered it to pay Ms Mayberry compensation of $8,789.23 (being 20 weeks at $439.46 per week) within 21 days. 4 Kijani failed to comply with the order. On 13 September 2011 Ms Mayberry filed an application seeking the following relief: 1. a declaration that the respondent has breached the civil remedy provision contained in the s 405 of the Fair Work Act 2009 ("the Act"), in that it has failed to comply with an order made by Commissioner Macdonald of Fair Work Australia pursuant to Part 3-2 of that Act on 14 July 2011 ("the Order"); 2. an order that the respondent comply with the Order by forthwith paying to the applicant the amount required by the Order; 3. an order that the respondent pay to the applicant interest on the amount outstanding pursuant to the Order since 5 August 2011; 4. an order requiring the respondent to pay a penalty of the type described in column 4 of item 13 of s 539 of the Act; 5. costs; and 6. such further or other orders as the Court deems fit. 5 Kijani did not appear when the application was listed for first directions on 17 October 2011. On that occasion I made orders for the filing and serving of affidavit evidence and submissions and set the proceeding down for hearing today. I also directed that Ms Mayberry serve a copy of the orders on the directors of Kijani personally by 4 pm the same day. Kijani filed no evidence, nor any submissions, and it did not appear today. Ms Mayberry sought an order, pursuant to r 30.21(1)(b) of the Federal Court Rules 2011 (Cth) that the hearing proceed in its absence . 6 Affidavit evidence was given that on 20 September 2011, Matthew Bryan, Ms Mayberry's solicitor, caused sealed copies of the originating application, Ms Mayberry's genuine steps statement, and her affidavit of 13 September 2011 in support of the application to be sent to Kijani's registered office. In a covering letter, Mr Bryan informed Kijani that the originating application was returnable before the Court at 9.30 am on 17 October 2011. On 7 October 2011, Mr Bryan wrote again to Kijani at its registered office, enclosing a copy of a notice of listing from the Court, advising that the time at which the originating application would be returned had been moved to 11 am on 17 October 2011. 7 On 25 October 2011 Mr Bryan emailed copies of two affidavits of service sworn on 19 October 2011 by Matthew Ellsmore, an affidavit of service Mr Bryan, himself, had sworn on 25 October 2011, and Ms Mayberry's written submissions dated 25 October 2011. In the email he confirmed that copies of those documents had been sent to the Court registry for filing, and advised that hard copies would be sent to Kijani the same day by post. These documents were sent to the same email address noted to be Kijani's email address in the notice of listing of the original application in Fair Work Australia. It is also the email address used by Nicole Dawe, one of the two directors of Kijani, on 30 September 2010 to communicate with all her staff about a matter concerning pay slips. . 8 Later on 25 October 2011, Mr Bryan forwarded to Kijani sealed copies of the documents to which I have just referred. Moreover, the same day, Mr Bryan said, and I accept, that he caused those sealed copies to be sent by express post to Kijani's registered office. 9 Unfortunately, my order that the directors be served personally with a copy of my orders, was not complied with. At 3.50 pm on 17 October 2011, Mr Ellsmore, a process server, nevertheless left a copy of a letter from Mr Bryan to Kijani , addressed to its directors, enclosing a copy of my orders, in the letterbox at their home (which also happens to be the address of Kijani's registered office). 10 No response was received to any of these communications. Mr Bryan, however, gave oral evidence that none of the emails or the letters had been returned to him. 11 In all the circumstances I am satisfied that Kijani is aware of these proceedings and is aware that this matter was listed for hearing today. I conclude that it has chosen to take no part in them. I therefore make the order Ms Mayberry sought under r 30.21(1)(b) that the hearing proceed in its absence. 12 The application was supported by an affidavit sworn by Ms Mayberry on 13 September 2011, to which I have already referred. That affidavit recites that Ms Mayberry was formerly employed by Kijani and that Kijani purported to terminate her employment on or about 16 November 2010. It refers to the proceeding she commenced against Kijani at Fair Work Australia and encloses a copy of the decision and the order made by the commissioner. 13 The affidavit annexed an email from Ms Mayberry to Ms Dawe sent on 5 August 2011, the day after the day by which the commissioner's order was to be complied with. In that email Ms Mayberry referred to Kijani's failure to comply with the order and listed remedies that were available to her. She told Kijani that she would give it final notice to pay the amount the subject of the order no later than 11 August 2011, foreshadowing that, if payment was not then made, she would seek orders in this Court. She also indicated in that email that she had sent a text message to Mr Dawe the same day to ensure that both directors were aware of the situation. 14 The affidavit also annexed a letter to Kijani from Mr Bryan dated 24 August 2011, which communicated in more formal terms the material conveyed by Ms Mayberry's email and notified Kijani that if the order was not complied with or the matter not resolved to Ms Mayberry's satisfaction by 4 pm on 1 September 2011, immediate steps would be taken to commence enforcement proceedings. 15 The Court has power to make any order it considers appropriate if it is satisfied that Kijani has contravened a civil remedy provision: s 545(1) of the Act. 16 The commissioner's orders were made under Part 3-2 of the Act, which deals with unfair dismissals. Section 405 of the Act, falling within Part 3-2, provides that a person to whom an order under that Part applies must not contravene a term of that order. Section 539 provides that a contravention (amongst other things) of s 405 is a civil remedy provision. 17 As an employee, Ms Mayberry, has standing to apply for the orders she seeks: s 540(1)(a) of the Act. 18 In my view, the orders she seeks are appropriate. 19 Not only should Ms Mayberry be paid the amount the commissioner ordered but she should also have interest on the unpaid amount. Indeed, s 547(2) relevantly provides that, where an order is made in relation to an amount that a person was required to pay to another, the court must include an amount of interest in the sum ordered, unless good cause is shown to the contrary. 20 The Court may make a pecuniary penalty order in addition to any other order. This is a proper case to make such an order. Employers, no less than employees, are expected to comply with the orders of Fair Work Australia. Failure to do so is liable to bring the system of regulation of industrial disputes into disrepute. Kijani's conduct signifies a refusal to accept the umpire's decision. It should not go unpunished. 21 The maximum penalty under the Act is fixed by s 546(2)(b) in the case of corporations at five times the maximum number of penalty units referred to in the relevant item in column 4 of the table in s 539(2). The maximum number of penalty units for unfair dismissal is 60. A penalty unit is $110. Thus, the maximum penalty for a civil remedy in a case of unfair dismissal is $33,000. 22 I take into account the fact that there is no evidence that Kijani has previously offended. But this is a serious matter. The applicant is a vulnerable, low-paid worker in an industry where vulnerable workers are commonly employed and where the scope for exploitation is high. The conduct in question involved Kijani's senior management. The commissioner found it to be entirely unjustified. There is no evidence to mitigate its seriousness. There is, for example, nothing to suggest that Kijani has shown any insight into, let alone remorse for, its behaviour, nor is there anything to demonstrate cooperation with Ms Mayberry or the Court – quite the opposite in fact. There is no reason to believe that the failure to comply with the commissioner's orders is not deliberate. On the contrary, everything points to the likelihood that Kijani has wilfully ignored them. 23 The penalty should reflect all of these matters. It should also be sufficient to deter Kijani from behaving in a similar way in the future and to send a message to other employers who might be tempted to follow its example. 24 Gray J's observations in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 ("Plancor") at [37] are pertinent: The … hospitality industry [is] an industry notorious for non-compliance with the standards imposed by industrial instruments … [it] is also an industry in which enforcement of those standards has proved to be notoriously difficult. 25 Similar remarks have been made in a number of other cases. See, for example, Flattery v The Italian Eatery (trading as Zeffirelli's Pizza Restaurant) (2007) 163 IR 14 at [66]; Workplace Ombudsmen v Golden Maple Pty Ltd (2009) 186 IR 211 at [59]. 26 I take into account the evidence before me concerning the size of Kijani's business. It appears to operate four Subway franchises in the Hunter Valley area. In particular, I note that in September last year it employed over 50 staff. 27 It seems to me that the proper penalty for Kijani's conduct in this case is $11,000. Once again, I note the remarks of Gray J in Plancor at [44] that the initiating party is normally the proper recipient of the penalty, and, in accordance with the terms of s 546(3)(c) of the Act, which gives the Court the power to order that the pecuniary penalty, or part of it, be paid to a particular person, I order that that sum be paid to Ms Mayberry. 28 Ms Mayberry should also have her costs. Despite the general rule against awarding costs in Fair Work proceedings, a party may be ordered to pay the other party's costs if the Court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs: s 570(2) of the Act. Ms Mayberry has incurred costs in bringing and prosecuting this action as a result of Kijani's conduct in disobeying or not complying with an order of Fair Work Australia. That should not have been necessary. On any view that act or omission is unreasonable. 29 Ms Mayberry sought an order that costs be paid in a lump sum. She claimed the sum of $6,380. I am prepared to allow $6,000. 30 I therefore declare that Kijani has breached the civil remedy provision contained in s 405 of the Act in that it has failed to comply with an order made by Fair Work Australia on 14 July 2011 and I order that it: (1) comply with the order of Fair Work Australia by forthwith paying to the applicant the amount of $8,789.23; (2) pay interest on that amount at the rate prescribed under r 39.06 of the Federal Court Rules 2011; (3) pay to the applicant a penalty of $11,000; and (4) pay the applicant's costs in the sum of $6,000. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann. Associate: Dated: 28 October 2011