FEDERAL COURT OF AUSTRALIA

Minister for Immigration and Border Protection v Hallmark Computer Pty Ltd [2016] FCA 678

ORDERS

THE COURT DECLARES THAT:

Contraventions by Hallmark Computer

1.    In the period October 2012 to March 2014, the first respondent (Hallmark Computer), as an approved Standard Business Sponsor in respect of Ruel Conducto Duran (Mr Duran), contravened s 140Q of the Migration Act 1958 (Cth) in respect of each of the following failures to satisfy a sponsorship obligation:

1.1    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations 1994 (Cth) on 35 occasions by paying Mr Duran less than the guaranteed annual earnings specified by Hallmark Computer in its nomination of Mr Duran.

1.2    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 35 occasions by failing to pay Mr Duran overtime and penalty rates, as specified by Hallmark Computer in its nomination of Mr Duran, for hours worked which exceeded 38 hours per week.

1.3    Hallmark Computer failed to satisfy reg 2.87 of the Migration Regulations on 35 occasions by recovering a component of Mr Duran’s fortnightly salary.

2.    In the period January 2013 to March 2014, Hallmark Computer, as an approved Standard Business Sponsor in respect of Dennis Baclayanto Escanlar (Mr Escanlar), contravened s 140Q of the Migration Act in respect of each of the following failures to satisfy a sponsorship obligation:

2.1    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 29 occasions by paying Mr Escanlar less than the guaranteed annual earnings specified by Hallmark Computer in its nomination of Mr Escanlar.

2.2    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 28 occasions by failing to pay Mr Escanlar overtime and penalty rates, as specified by Hallmark Computer in its nomination of Mr Escanlar, for hours worked which exceeded 38 hours per week.

2.3    Hallmark Computer failed to satisfy reg 2.87 of the Migration Regulations on 28 occasions by recovering a component of Mr Escanlar’s fortnightly salary.

3.    In the period December 2012 to March 2014, Hallmark Computer, as an approved Standard Business Sponsor in respect of Roxanne Espiritu De Guzman (Mr De Guzman), contravened s 140Q of the Migration Act in respect of each of the following failures to satisfy a sponsorship obligation:

3.1    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 29 occasions by paying Mr De Guzman less than the guaranteed annual earnings specified by Hallmark Computer in its nomination of Mr De Guzman.

3.2    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 28 occasions by failing to pay Mr De Guzman overtime and penalty rates, as specified by Hallmark Computer in its nomination of Mr De Guzman, for hours worked which exceeded 38 hours per week.

3.3    Hallmark Computer failed to satisfy reg 2.87 of the Migration Regulations on 28 occasions by recovering a component of Mr De Guzman’s fortnightly salary.

4.    In the period April 2013 to October 2013, Hallmark Computer, as an approved Standard Business Sponsor in respect of Anup Bhatia (Mr Bhatia), contravened s 140Q of the Migration Act in respect of each of the following failures to satisfy a sponsorship obligation:

4.1    Hallmark Computer failed to satisfy reg 2.79 of the Migration Regulations on 13 occasions by paying Mr Bhatia less than the guaranteed annual earnings specified by Hallmark Computer in its nomination of Mr Bhatia.

4.2    Hallmark Computer failed to satisfy reg 2.87 of the Migration Regulations on 13 occasions by recovering a component of Mr Bhatia’s fortnightly salary.

4.3    Hallmark Computer failed to satisfy reg 2.86 of the Migration Regulations on at least 13 occasions by requiring Mr Bhatia to work as a ‘delivery officer’ when the only occupation nominated by Hallmark Computer in its nomination of Mr Bhatia was the occupation ‘ICT Sales Representative’.

Contraventions by Mr Alexander

5.    In the period October 2012 to March 2014 the second respondent (Mr Alexander) contravened s 140Q of the Migration Act in respect of each of the contraventions of s 140Q of the Migration Act by Hallmark Computer described in paragraphs 1 to 4 above because in his capacity as sole director and shareholder of Hallmark Computer he did aid, abet, counsel or procure, and was knowingly concerned in, each of those contraventions.

THE COURT ORDERS THAT:

Restitution

6.    The first respondent pay restitution pursuant to s 486S of the Migration Act in respect of the contraventions described in declarations 1, 2 and 3 above in the following amounts:

(a)    to Mr Ruel Conducto Duran – $22,002.18; and

(b)    to Mr Dennis Baclayanto Escanlar – $21,185.68; and

(c)    to Mr Roxanne Espiritu De Guzman – $21,185.68; and

(d)    to the Commonwealth – $17,092.

7.    The first respondent pay restitution pursuant to s 486S of the Migration Act with respect to the days worked by Mr Escanlar and Mr De Guzman in the period from 29 December 2012 to 10 January 2013 in the following amounts:

(a)    to Mr Dennis Baclayanto Escanlar – $822.50; and

(b)    to Mr Roxanne Espiritu De Guzman – $822.50; and

(c)    to the Commonwealth – $355.

Penalties against Hallmark Computer

8.    Subject to order 10 below:

(a)    For the contraventions referred to in declarations 1.1 and 1.3, a penalty against the first respondent of $100,000.

(b)    For the contraventions referred to in declarations 2.1 and 2.3, a penalty against the first respondent of $100,000.

(c)    For the contraventions referred to in declarations 3.1 and 3.3, a penalty against the first respondent of $100,000.

(d)    For the contraventions referred to in declarations 4.1 and 4.2, a penalty against the first respondent of $100,000.

(e)    For the contraventions referred to in declaration 1.2, a penalty against the first respondent of $65,000.

(f)    For the contraventions referred to in declaration 2.2, a penalty against the first respondent of $65,000.

(g)    For the contraventions referred to in declaration 3.2, a penalty against the first respondent of $65,000.

(h)    For the contraventions referred to in declaration 4.3, a penalty against the first respondent of $50,000.

Penalties against Mr Alexander

9.    Subject to order 11 below:

(a)    For the contraventions referred to in declarations 1.1, 1.3 and 5, a penalty against the second respondent of $20,000.

(b)    For the contraventions referred to in declarations 2.1, 2.3 and 5, a penalty against the second respondent of $20,000.

(c)    For the contraventions referred to in declarations 3.1, 3.3 and 5, a penalty against the second respondent of $20,000.

(d)    For the contraventions referred to in declarations 4.1, 4.2 and 5, a penalty against the second respondent of $20,000.

(e)    For the contraventions referred to in declarations 1.2 and 5, a penalty against the second respondent of $13,000.

(f)    For the contraventions referred to in declarations 2.2 and 5, a penalty against the second respondent of $13,000.

(g)    For the contraventions referred to in declarations 3.2 and 5, a penalty against the second respondent of $13,000.

(h)    For the contraventions referred to in declarations 4.3 and 5, a penalty against the second respondent of $10,000.

Total Penalties

10.    (a)    The total penalties referred to in order 8 be reduced to a total penalty against the first respondent of $430,000.

(b)    The first respondent pay to the Commonwealth of Australia pursuant to s 486R of the Migration Act the total pecuniary penalty referred to in order 10(a) in the amount of $430,000.

11.    (a)    The total penalties referred to in order 9 be reduced to a total penalty against the second respondent of $86,000.

(b)    The second respondent pay to the Commonwealth of Australia pursuant to s 486R of the Migration Act the total pecuniary penalty referred to in order 11(a) in the amount of $86,000.

Time for Payment

12.    The amounts referred to in orders 6, 7, 10 and 11 be paid within 28 days.

Costs

13.    The respondents pay the applicant’s costs as taxed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BUCHANAN J:

Background

1    This is a case which calls for the application of the simple and straightforward principle that courts should attempt to ensure that the risk of a fine for breach of statutory obligations is not seen by those who commit civil penalty offences as an acceptable cost of doing business (see Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [64]-[66]; Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 90 ALJR 113 at [110]).

2    The first respondent (“Hallmark Computer”) is a company based in Darwin in the Northern Territory. It conducts a business assembling, distributing and repairing computer products and mobile devices. In the relevant period the second respondent, Mr Ashok Alexander, was sole director and ultimate sole shareholder of Hallmark Computer. In June 2014 his wife, Neethi Ashok, became the sole shareholder. Mr Alexander remained the sole director.

3    In August 2012, Hallmark Computer sought, and was granted, approval as a “Standard Business Sponsor” under the Migration Act 1958 (Cth). In the months which followed (i.e. between September 2012 and December 2012), three male Philippine citizens and one male citizen of India were, on the nomination of Hallmark Computer, granted “457 visas” (i.e. subclass 457 Temporary Work (Skilled) visas) to work in Australia for Hallmark Computer. In each case, Hallmark Computer thereafter breached its sponsorship obligations.

4    Based on the admissions in the pleadings and the agreed facts (to which I refer in more detail hereunder), I accept the following submissions by counsel for the Minister:

2.    … Hallmark Computer failed on numerous occasions to satisfy its sponsorship obligations under the Migration Regulations 1994 (Cth) in respect of each of the 4 sponsored persons. The contraventions can be summarised as follows:

2.1.    Guaranteed earnings contraventions: Each fortnight, Hallmark Computer required each of the sponsored persons to repay to it, in cash, a portion of his net wages for that fortnight. On each such fortnight this reduced the wages paid to the sponsored person to a level significantly below his respective guaranteed earnings, contrary to the sponsorship obligation in reg 2.79(3).

2.2.    Work without pay contraventions: Each fortnight, Hallmark Computer required each of 3 of the sponsored persons to work additional hours and refused to pay him for those hours. Additionally, 2 of the sponsored persons were required to work for a period in which they were not paid at all. Again, this led to fortnightly failures to comply with the sponsorship obligation in reg 2.79(3).

2.3.    Nominated occupation contraventions: Each fortnight, Hallmark Computer required one of the sponsored persons to work in an (unskilled) occupation other than his nominated (skilled) occupation, contrary to the sponsorship obligation in reg 2.86.

2.4.    Recovery contraventions: Through each of the repayments constituting the guaranteed earnings contraventions, Hallmark Computer recovered costs from the sponsored persons, contrary to the sponsorship obligation in reg 2.87.

3.    Mr Alexander was personally and centrally involved in each of these contraventions, aiding and abetting them in breach of s 140Q of the Migration Act: see s 486ZD.

(Bold in original.)

Orders sought or agreed

5    The proceedings in this Court were commenced on 2 June 2015 by application and statement of claim. They sought declarations, civil penalty orders and restitution orders.

6    The parties have agreed that orders for payment to three of the employees should be made in the amounts of $22,002.18, $21,185.68 and $21,185.68 respectively and that an amount of $17,092 should be paid to the Commonwealth for PAYG tax due on those amounts.

7    In addition, the Minister seeks an order (which is not agreed) of further compensation for two of those three employees equivalent to one week’s pay when, as admitted on the pleadings, they were required to work but were not paid. The amounts are $822.50 payment to each employee and $355 total payment to the Commonwealth for PAYG tax on those amounts. Although the orders were not agreed, the facts were. The payments should be made as the Minister submitted.

8    The fourth employee was, after a period, required to work in a non-skilled capacity. He was also required to make cash repayments from his fortnightly pay as discussed below. When, on 27 September 2013 he refused to do so any longer he was dismissed and in subsequent proceedings commenced in the Fair Work Commission he negotiated a settlement. No further payment to him is sought in the present proceedings.

Agreed facts

9    By a joint defence filed on 8 September 2015, each of the respondents admitted each paragraph of the statement of claim relevant to that respondent. In addition, a statement of agreed facts was filed on 23 November 2015 setting out a number of propositions which, apparently, the respondents are content for the Court to accept as facts which might bear on the assessment of penalties, although some matters appear to me likely to be outside the specific knowledge of the respondents.

10    Further short agreed statements were filed on 5 February 2016 and 4 March 2016. The first set out the agreed position concerning restitution and PAYG tax for the three underpaid employees and the second recorded a one-off bonus paid to each at some stage in their employment. In two cases a bonus of $2,000 was paid “for being employee of the year” and in one case a “Christmas bonus” of $500 was paid. Those facts seem to me to have no bearing on the matters for decision.

11    Having regard to the agreed calculations for the amounts payable for restitution, and my acceptance of the claim for further payment to two employees based on agreed facts, the remaining matters concern whether declarations should be made, and their terms, and what penalties should be imposed.

Declarations

12    The parties were agreed that declarations should be made, and their terms.

13    Notwithstanding that agreed position, I had misgivings initially about the need to make the declarations sought by the Minister, even though they were not opposed by Hallmark Computer or Mr Alexander and even though they were appropriately precise.

14    My principal reservation related to the fact that orders imposing penalties and granting compensation incorporate the findings which sustain and explain those orders.

15    Declarations are granted to determine legal controversy. They are a vindication of legal rights. The statutory rights in the present case, in large measure, will be vindicated by the imposition of penalties. To that extent, arguably, the declarations sought and agreed do no more than state the legal foundation which calls for the imposition of the penalties, and once those penalties are imposed that might constitute a sufficient public record which renders declarations (in the present case at least) superfluous and unnecessary.

16    However, there are two related matters which have persuaded me, in the present case, to make the declarations sought by the Minister. The first is that the penalties to be imposed, and the orders for compensation, are to an extent aggregate in nature. The second is that there are some contraventions which will not attract a separately stated penalty.

17    In the circumstances, I will make the unopposed declarations.

Civil penalties

18    Section 486R(6) of the Migration Act states the matters to be taken into account in fixing a civil penalty under the Migration Act:

486R    Civil penalty orders

…

Determining pecuniary penalty

…

(6)    In determining the pecuniary penalty, the eligible court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the Department has taken any administrative action against the person in relation to the conduct constituting the contravention or any similar conduct; and

(e)    whether the person has been issued with an infringement notice under regulations made for the purposes of section 506A in relation to the conduct constituting the contravention or any similar conduct; and

(f)    whether the person has previously been found by a court in proceedings under this Act to have engaged in any similar conduct.

19    Sections 486U and 486V are also relevant. They provide:

486U    Conduct contravening more than one civil penalty provision

(1)    If conduct constitutes a contravention of 2 or more civil penalty provisions, proceedings may be instituted under this Part against a person in relation to the contravention of any one or more of those provisions.

(2)    However, the person is not liable to more than one pecuniary penalty under this Part in relation to the same conduct.

486V    Multiple contraventions

(1)    An eligible court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character.

(2)    However, the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate penalty were ordered for each of the contraventions.

20    I accept (with a qualification) the following submission made by counsel for the Minister:

65.    Hallmark Computer and Mr Alexander each contravened the Migration Act on 314 separate occasions. The contravening conduct was calculated, deliberate, deceptive and systematic. It took a variety of forms and was sustained over a period of about 15 months (…). Mr Alexander was centrally involved in each of the contraventions by Hallmark Computer and the contravening conduct of Hallmark Computer was either performed by Mr Alexander personally, or by others acting on his direction, consent or authority.

(Footnote omitted.)

21    The qualification is this. It is true that the contravening conduct took a variety of forms but, in truth, there were really only two forms of conduct practised on three of the employees and there was, in addition, a separate (third) feature applying to the fourth employee (who was also subjected to underpayment through a pay back system).

22    The two principal forms of conduct were: underpaying ordinary wages by recovering a portion of them; and, failing to pay for hours worked in excess of 38 per week. Amounts of ordinary fortnightly pay were not initially withheld. Pay was required to be partially reimbursed. The first practice therefore infringed two separate legal obligations (stated by reg 2.79(3) and reg 2.87(1B) of the Migration Regulations 1994 (Cth)), but it was no less the same practice on that account.

23    The failure to pay for hours worked in excess of 38 per week in the case of three employees also infringed reg 2.79(3), but it was not the same conduct as the failure to pay ordinary fortnightly pay, or retrieving some amount of that pay.

24    In the case of each employee there were multiple contraventions (ranging from 13 to 35) corresponding to each underpayment or failure to pay (i.e. roughly each fortnight).

25    The third feature was the arrangement imposed on the fourth employee, i.e. of working as a “delivery-transfer officer” rather than as a “sales representative”. Otherwise, he was subjected to the same first practice as the other employees. Being required to work in a non-nominated occupation may be accepted to be a breach of a sponsorship obligation, but it seems to me to be of much less significance than the active exploitation, by underpayment, of each of the employees.

26    In substance, in my view, the proper approach in the present case is to regard the contraventions as involving eight separate courses of conduct (i.e. underpayment and non-payment in three cases and underpayment and a direction to work in a non-nominated role in the fourth case). I agree, as submitted by counsel for the Minister, that similar conduct with respect to different employees should not be treated as the same course of conduct.

27    The Minister accepted that where s 486U applied (i.e. the same conduct breached separate statutory obligations) it was proper to apply only a single penalty for that conduct.

28    Section 486U does not deal, however, with the question of multiple contraventions of the same obligation – i.e. it does not deal directly with a course of conduct or adoption of a practice whereby there are repeated contraventions – e.g. occurring on a number of days or on a number of occasions such as in each pay period.

29    In such a case s 486V permits a single penalty for repeated contraventions of the same kind. Section 486V(2) appears to make clear that the penalty may exceed the penalty for a single offence. In that respect it may be contrasted with s 557 of the Fair Work Act 2009 (Cth) which directs that a course of conduct is to be penalised as though it was a single contravention of that Act.

30    The Minister’s submissions invited me to first assess indicative penalties for each course of contraventions (unconfined by the maximum penalty for any single contravention) and then make some reductions, finally suggesting a range of possible total penalties of $325,000 to $375,000 for Hallmark Computer and $65,000 to $75,000 for Mr Alexander. The respondents made no specific submission about penalty.

31    The first question is whether the assessment of a penalty for each course of conduct should be made by reference to the statutory maximum penalty for a single such offence, or not. As I have said, s 486V(2) appears to suggest that the assessment is not so confined, but at the same time, double punishment must be avoided where repeat offending is truly a manifestation of a single initiative.

32    The Minister’s submissions pointed out that single judges and Full Courts occasionally remark that the “sentencing discretion” to acknowledge and accommodate overlapping or similar conduct does not require that all such conduct be treated as though the maximum penalty available is that for a single offence (see e.g. Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 194 IR 461; 269 ALR 1 at [39], [41] and [42]; Australian Energy Regulator v Snowy Hydro Limited (No 2) [2015] FCA 58 at [117]-[120]).

33    However, the invitation made in the present case to fix penalties at levels higher than would be available for a single contravention, in the case of repeated conduct of the same or a similar kind (i.e. conventionally, a single course of conduct) raises some difficult issues.

34    In the case of one of the employees, for example, there were 35 fortnightly occasions of underpayment of ordinary fortnightly pay. That was clearly the result of a single course of conduct with respect to that employee, even though there were, admittedly, 35 single contraventions of that particular kind. If all the admitted contraventions of that obligation (i.e. for that employee) were treated as individual contraventions, the possible total penalties would be maximum of $1,677,000 (taking into account changes to maximum penalties at one point early in the period) for Hallmark Computer, whereas the current maximum penalty for an individual contravention is $51,000. Even doubling the penalty which would be assessed for a single contravention would risk a penalty out of proportion to the overall conduct involved in each case, as I discuss hereunder.

35    Where, effectively, eight courses of conduct are involved, as in the present case, the problem is significantly magnified, when total penalties are calculated.

36    A statutory direction of the kind in s 557 of the Fair Work Act puts the position beyond doubt, although it substantially constrains the available penalty in a case where the conduct is repeated on numerous occasions.

37    Once the statutory maximum penalty for a single contravention may be exceeded the assessment can not be closely related to any concept of objective seriousness which takes as its upper limit (i.e. the worst possible case) the statutory maximum penalty for a single contravention, or for all contraventions.

38    As I have said, it is appropriate to treat each of the particular fortnightly contraventions (i.e. each of the failures in respect of each of the four employees to pay the required amounts) as arising in a particular course of conduct. That is to say, the 35 instances of requiring one employee to repay some of his fortnightly pay (thereby reducing his salary below the level approved by the Minister) arose out of a single course of conduct. So did the 35 failures to pay that employee for hours worked in excess of 38 per week arise out of a single (different) course of conduct. So did the repeated failures to pay the other employees their proper fortnightly salary and the failures in two cases to pay for extra hours and in one case the repeated requirement to work in a different role. Nevertheless, these were not individual or isolated cases of infringement. Each of the eight different courses of conduct which must be considered involved calculated, systematic, repeated and callous infringements of the sponsorship conditions and the rights of the employees. Those abuses involved a cynical misuse and exploitation of the superior position of Hallmark Computer. They each were effected by the conduct of Mr Alexander.

39    In the particular circumstances of the present case I accept, as the Minister submitted, that the final penalty referable to each course of conduct should not be seen as constrained, as a matter of discretion, by the penalty for a single contravention (s 486V(2)). A penalty constrained in that way would not sufficiently address the seriousness of the respondents’ conduct.

40    I regard the contraventions represented by the underpayment (i.e. recovery of pay) and non-payment as serious. Indeed, I regard the actions of the respondents in actively retrieving properly paid amounts as very serious. I accept the following submission by counsel for the Minister:

66.    … The reduction in guaranteed earnings is the more significant given that the approved wages were barely above the temporary skilled migration income threshold, considered to be the minimum salary necessary for 457 visa holders to support themselves in Australia. As a result, the contraventions put the workers in a position of financial hardship of a kind which went beyond that which may have been felt by a higher income earner being deprived of the same amount. Additionally, the deceptive and overbearing system established by the respondents increases the seriousness of these contraventions. They were undertaken through apparently proper wage payments being made and recorded, but with a wholly unrecorded cash repayment being required. Furthermore, they were enforced through penalty amounts for late payment and threats of dismissal. For all of these reasons the guaranteed earnings contraventions are properly to be seen as the most serious of the differing forms of wrongdoing; the penalties to be imposed should reflect as much.

(Footnotes omitted.)

41    I also accept the following submissions:

76.    As the sole director and ultimate sole shareholder of Hallmark Computer, Mr Alexander stood to benefit from any financial gain of Hallmark Computer by reason of the contraventions.

77.    A most serious aspect of the circumstances in which the contraventions took place is the deliberate, systematic and sustained deception which they involved. This is explained in detail in the SAF at [26]-[28], [64]-[92] and [109]. For example:

77.1.    The respondents were at all times fully aware of their obligations as sponsor, including with respect to ensuring terms and conditions and nominated occupations were satisfied, not recovering costs, keeping accurate records, providing accurate information to the Department and not preventing a person from assisting an inspector. All of these obligations were breached.

77.2.    Throughout an investigation from December 2013 to September 2014, the respondents repeatedly lied to Departmental investigators and provided them with misleading information and knowingly false records. These lies were sustained and repeated despite the fact that:

77.2.1.    Mr Alexander knew that doing so was a criminal offence;

77.2.2.    the specific nature of the Department’s queries left no room for any ambiguity or uncertainty as to the particular concerns which investigators held; and

77.2.3.    the Department had advised that it had accurate information as to the true position, including by reference to detailed records and voice recordings.

77.3.    The respondents seriously abused the position of power which they held over the sponsored persons. They did so in an attempt to preserve their capacity to further their financial interests at the expense of the workers and with a view to ensuring consistency and corroboration in their lies to the Department. To this end Mr Alexander took a number of steps:

77.3.1.    He deterred them from making complaints to the Department.

77.3.2.    He verbally intimidated and manipulated them by reference to threats that they would be fired (as indeed they ultimately were) and promises to support applications for permanent residency if they continued to work for him.

77.3.3.    He maintained a strict and careful practice of ensuring cash repayments which would not be reflected in any receipts or other records, creating misleading wage payment records, preventing the use of timesheets and checking that no other record of the wrongdoing was being created.

77.3.4.    He enforced the repayment scheme though the imposition of penalty fees for any late repayments.

77.3.5.    Having received a letter from Departmental investigators, held a meeting with the 3 remaining sponsored persons (Mr Bhatia having by then been dismissed after ceasing to make repayments to Hallmark Computer). During the meeting he explained the importance to him of not being caught lying to the Department, encouraged them to lie to the Department and coached them on how to do so convincingly.

77.3.6.    Refused a request by Mr Escanlar to delay a repayment, threatening that it would delay his Permanent Residency and would get very nasty for him.

77.4.    Despite all of the above circumstances, the respondents did not take any step to moderate or remedy their wrongdoing or the harms they were causing. The contraventions continued throughout the Department’s investigation and right up until 3 of the sponsored persons stopped making repayments. Even at that point no corrective action was taken. Instead, the respondents made allegations of wrongdoing against the workers and, shortly thereafter, advised them that they had become redundant and would be terminated. (A similar incident had resulted in the termination of Mr Bhatia’s employment some months earlier – a matter which led to proceedings in the Fair Work Commission.)

78.    These features of the contraventions are at the very most serious end of the spectrum.

(Footnote omitted.)

42    Neither of the respondents has previously been found to breach the Migration Act. Hallmark Computer has now been banned, by administrative action, from being a sponsor until September 2019 – i.e. for five years from 18 September 2014.

43    I note the following matters referred to in submissions by counsel for the Minister:

91.    The respondents provided no meaningful co-operation prior to these proceedings. On the contrary, the respondents vigorously denied their wrongdoing and knowingly proffered misleading records in support of their denials. While the respondents made early admissions to the Department in respect of Mr Bhatia, these were made as part of a strategy to minimise the consequences for that wrongdoing and to prevent discovery of the other wrongdoing.

92.    However, after the commencement of these proceedings, the respondents have cooperated substantially through:

92.1.    filing a Defence admitting the contraventions

92.2.    joining with the Minister in filing a Statement of Agreed Facts describing the facts relevant to the contraventions.

93.    This cooperation has assisted significantly in enabling the contravention to be proven (by reason of the Defence and Statement of Agreed Facts) and also involved frank acceptance of a number of matters which had an aggravating effect on the penalty to be imposed. If the respondents had not cooperated the time and cost involved would have been significantly greater.

94.    As against the above, it must be noted that the case against the respondents was a strong one supported by contemporaneous records and voice recordings taken by the sponsored persons. In this respect it is well recognised that there may be no discount, or only a low one, where the admissions amount to little more than an acceptance of the inevitable.

95.    Having regard to all of the above circumstances, the Minister considers that the respondents should not be given the fullest discount for cooperation (such as might be appropriate for a person who made immediate admissions to matters which could not have been readily proved). However, they should be given a discount for co-operation in the order of a 10% to 15% reduction on the penalties which would otherwise be appropriate.

(Footnotes omitted.)

44    I will make some allowance for the co-operation which was shown after the proceedings commenced (by which no doubt the respondents contained their own legal costs).

45    In the present case I see no reason to make any further discount in favour of Mr Alexander, as sought on his behalf. He was the guiding mind of Hallmark Computer. On the admissions each has made he is as fully culpable as Hallmark Computer.

46    The picture painted by the agreed facts was one of consistent deception, lies and threats by Mr Alexander until his culpability, and that of Hallmark Computer, became undeniable. I see no evidence of any kind of contrition. The payments in restitution, which it was admitted should be ordered, had not been made at the time of the hearing.

47    One further matter should be mentioned. In point of timing, the maximum penalty increased during the period of contraventions concerning one employee. The increase was from $33,000 to $51,000 for a corporation and $6,600 to $10,200 for an individual. The lower penalty applies to 6 out of 35 possible individual contraventions concerning that employee (i.e. about 1/6th). In the circumstances, I propose in the discussion which follows, to use the later maximum penalties as a point of reference applicable to the great bulk of the admitted contraventions in that case as well as the others.

48    If penalties were confined (for each course of conduct) to those for single such contraventions, I would assess the seriousness of the eight courses of conduct against the statutory prescription of that maximum penalty as follows:

49    That assessment would (operating under that constraint) suggest penalties for Hallmark Computer of $40,800 for each of four courses of conduct, $33,150 for each of three courses of conduct and $20,400 for one course of conduct; a total of $283,050. For Mr Alexander the penalties would be $8,160 for each of four courses of conduct, $6,630 for each of three courses of conduct and $4,080 for one course of conduct; a total of $56,610.

50    If I had been constrained to treat the penalty for a course of conduct as limited to the penalty for a single contravention – i.e. if s 486V(2) did not apply and a provision like s 557 of the Fair Work Act did apply – I would not have reduced the amounts of $283,050 and $56,610 by any application of the totality principle.

51    However, as I have said, it would not adequately recognise the seriousness of the respondents’ conduct to proceed on the basis that assessment of a penalty for each course of conduct was confined within the range of penalties available for a single offence (see Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 7) [2016] FCA 424 at [95]). Section 486V(2) makes it clear that there is no such constraint. The only statutory constraint is that the penalty must not exceed the sum of penalties for all of the contraventions in the course of conduct. It was admitted, to take the first course of conduct as an example, that there were 35 contraventions involved in that course of conduct. Confining a penalty within the statutory limit for a single contravention would not produce an assessment proportionate to the wrongdoing involved, which was considerable.

52    Nor would it be appropriate, in my view, to fix a penalty for each contravention, multiply it 35 times and resort, only at the end, to the totality principle to bring the total penalty for that course of conduct back into proportion.

53    The difficulty is to provide some explanation of my approach to the task of assessing the appropriate penalties for each course of conduct by reference to both issues of commonality and objective seriousness (e.g. so that it may be reviewed on appeal if necessary) while avoiding creating an artificial calculus which departs from the task of assessing penalties, ultimately, as a result of “instinctive synthesis” (see Markarian v The Queen (2005) 228 CLR 357).

54    In order to provide some focus on the need to avoid “double punishment” for effectively the same conduct, and on the need to fix appropriate penalties, but ones which are proportionate to the seriousness of the offending, it is instructive to consider the possibility of effectively penalising two (rather than one) of the contraventions in each course of conduct and examine whether penalties fixed in that way would seem proportionate, or disproportionate, to the seriousness of the offending.

55    That approach would, on the assessment of objective seriousness I have already given, result in double the assessment made earlier; i.e. total penalties of $566,100 for Hallmark Computer and $113,220 for Mr Alexander.

56    That seems to identify a possible approach but I would not regard a mechanically mathematical approach of this kind as very satisfactory. I would also assess those total penalties as too high, and it would be necessary to reduce them by the application of the totality principle, in any event.

57    Rather than posit any calculation of this kind involving a multiplier effect I propose simply to assess a penalty for the whole of each of the eight courses of conduct, bearing in mind that the penalty is not constrained by the amount of the penalty for single offences and then consider whether the totality principle applies. I will bear in mind the matters referred to in s 486R(6) and the limited co-operation by the respondents which I discussed earlier.

58    I will, in this assessment, retain the proportionate relationship indicated by the Act as between corporate and individual offenders – i.e. treating Hallmark Computer and Mr Alexander as equally culpable.

59    I consider that each course of conduct involving retrieval of amounts properly paid should attract a starting penalty of $100,000 (Hallmark Computer) and $20,000 (Mr Alexander). Each course of conduct involving a failure to pay for additional hours worked should attract a starting penalty of $65,000 (Hallmark Computer) and $13,000 (Mr Alexander). The course of conduct involving disregard of nominated duties (less serious perhaps for an individual, but a deliberate abuse of the visa system nevertheless) should attract a starting penalty of $50,000 (Hallmark Computer) and $10,000 (Mr Alexander).

60    Those starting penalties total $645,000 (Hallmark Computer) and $129,000 (Mr Alexander). Applying the totality principle, I propose to reduce those total penalties by one-third.

Orders

61    Taking all those matters into account, I will impose total final penalties on Hallmark Computer of $430,000 and on Mr Alexander of $86,000.

62    Payment of all amounts ordered (whether by way of restitution, amounts on account of tax or penalties) should be made within 28 days.

63    Costs should follow the event.

Associate:

Dated:    8 June 2016