AMWU v Carlton Sheet Metal Pty Ltd
[2011] FMCA 536
•26 July 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AMWU v CARLTON SHEET METAL PTY LTD & ORS | [2011] FMCA 536 |
| INDUSTRIAL LAW – Contraventions of Workplace Relations Act 1996 and Fair Work Act 2009 by two companies subsequently placed in liquidation – course of conduct commencing under Workplace Relations Act 1996 and continuing under Fair Work Act 2009 – accessorial liability of managers for conduct of companies – civil penalties – matters relevant to penalty – relevance of GEERS payments to companies’ former employees. |
| Workplace Relations Act 1996, ss.4, 717, 718, 719, 727, 728, 824 Fair Work Act 2009, ss.539, 545, 546, 550, 557, 570 Corporations Act 2001, s.471B Fair Work (Transitional Provisions & Consequential Amendments) Act 2009, item 11 of sch.2, item 2 of sch.3, items 2 & 16 of sch.16 |
| Termijtelen v Van Arkel [1974] 1 NSWLR 525 Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 Damberg v Damberg (2001) 52 NSWLR 492 Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Gibbs v Mayor, Councillors & Citizens of the City of Altona (1992) 37 FCR 216 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 CPSU, The Community & Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 Pearce v R (1998) 194 CLR 610 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 Attorney-General (SA) v Tichy (1982) 30 SASR 84 Construction, Forestry, Mining & Energy Union v Williams (2009) 262 ALR 417 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 |
| Applicant: | AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION |
| First Respondent: | CARLTON SHEET METAL PTY LTD ACN 001 310 738 |
| Second Respondent: | CARLTON SHEET METAL SYDNEY PTY LTD ACN 131 918 422 |
| Third Respondent: | CSM AUSTRALIA PTY LTD ACN 124 755 193 |
| Fourth Respondent: | INDUSTRY ACCESS & HIRE PTY LTD ACN 124 755 193 |
| Fifth Respondent: | SIMON ROBERT USALJ |
| Sixth Respondent: | DOMINIC USALJ |
| Seventh Respondent: | FILOMENA USALJ |
| Eighth Respondent: | JOSEPH USALJ |
| Ninth Respondent: | ANTOINETTE FRANKLAND |
| Tenth Respondent: | CRAIG FRANKLAND |
| File Number: | SYG 1579 of 2009 |
| Judgment of: | Cameron FM |
| Hearing dates: | 5 April 2011, 12 May 2011 |
| Date of Last Submission: | 20 June 2011 |
| Delivered at: | Sydney |
| Delivered on: | 26 July 2011 |
REPRESENTATION
| Solicitors for the Applicant: | Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union |
| Solicitors for the Fifth & Tenth Respondents: | Mr D. Leamey |
ORDERS
The fifth respondent pay a penalty of $1,000 for his involvement, in contravention of the Workplace Relations Act 1996, in the first respondent’s breach of item 1 of appendix 9 of the Carlton Sheetmetal Pty Ltd On-Site Construction Collective Agreement for Sydney 2006-2008 by failing to pay superannuation contributions in respect of certain of its employees.
The fifth respondent pay a penalty of $1,000 for his involvement, in contravention of the Workplace Relations Act 1996, in the first respondent’s breach of item 2 of appendix 9 of the Carlton Sheetmetal Pty Ltd On-Site Construction Collective Agreement for Sydney 2006-2008 by failing to make weekly redundancy contribution payments in respect of certain of its employees.
The fifth respondent pay a penalty of $4,000 for his involvement, in contravention of the Workplace Relations Act 1996, in the first respondent’s breach of clause 8 of the Metal, Engineering and Associated Industries (Superannuation) Award by failing to make superannuation contributions for the benefit of certain of its employees.
The fifth respondent pay a penalty of $200 for his involvement, in contravention of the Workplace Relations Act 1996, in the first respondent’s breach of clause 4.3.1 of the Metal, Engineering and Associated Industries Award 1998 by failing to provide a prescribed period of notice or to make a prescribed payment in lieu of notice to one of its employees.
The fifth respondent pay a penalty of $500 for his involvement, in contravention of the Workplace Relations Act 1996, in the first respondent’s breach of clause 4.4.2 of the Metal, Engineering and Associated Industries Award 1998 by failing to pay a prescribed amount of severance pay to one of its employees.
The fifth respondent pay a penalty of $100 for his involvement, in contravention of the Workplace Relations Act 1996, in the fourth respondent’s breach of clause 8 of the Metal, Engineering and Associated Industries (Superannuation) Award by failing to make superannuation contributions in respect of certain of its employees.
The fifth respondent pay a penalty of $100 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 8 of the Metal, Engineering and Associated Industries (Superannuation) Award by failing to make superannuation contributions in respect of one of its employees.
The fifth respondent pay a penalty of $100 for his involvement, in contravention of the Workplace Relations Act 1996, in the fourth respondent’s breach of clause 4.3.1 of the Metal, Engineering and Associated Industries Award 1998 by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to one of its employees.
The fifth respondent pay a penalty of $200 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 4.3.1 of the Metal, Engineering and Associated Industries Award 1998 by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to certain of its employees.
The fifth respondent pay a penalty of $1,200 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 4.4.2 of the Metal, Engineering and Associated Industries Award 1998 by failing to pay a prescribed amount of severance pay to certain of its employees.
The fifth respondent pay a penalty of $100 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 7.1.11 of the Metal, Engineering and Associated Industries Award 1998 by failing to pay a proportionate amount of annual leave in respect of one of its employees.
The tenth respondent pay a penalty of $100 for his involvement, in contravention of the Workplace Relations Act 1996, in the fourth respondent’s breach of clause 8 of the Metal, Engineering and Associated Industries (Superannuation) Award by failing to make superannuation contributions in respect of certain of its employees.
The tenth respondent pay a penalty of $100 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 8 of the Metal, Engineering and Associated Industries (Superannuation) Award by failing to make superannuation contributions in respect of one of its employees.
The tenth respondent pay a penalty of $100 for his involvement, in contravention of the Workplace Relations Act 1996, in the fourth respondent’s breach of clause 4.3.1 of the Metal, Engineering and Associated Industries Award 1998 by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to one of its employees.
The tenth respondent pay a penalty of $200 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 4.3.1 of the Metal, Engineering and Associated Industries Award 1998 by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to certain of its employees.
The tenth respondent pay a penalty of $1,200 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 4.4.2 of the Metal, Engineering and Associated Industries Award 1998 by failing to pay a prescribed amount of severance pay to certain of its employees.
The tenth respondent pay a penalty of $100 for his involvement, in contravention of the Fair Work Act 2009, in the fourth respondent’s breach of clause 7.1.11 of the Metal, Engineering and Associated Industries Award 1998 by failing to pay a proportionate amount of annual leave in respect of one of its employees.
The penalties be paid to the applicant.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1579 of 2009
| AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION |
Applicant
And
| CARLTON SHEET METAL PTY LTD ACN 001 310 738 |
First Respondent
| CARLTON SHEET METAL SYDNEY PTY LTD ACN 131 918 422 |
Second Respondent
| CSM AUSTRALIA PTY LTD ACN 124 755 193 |
Third Respondent
| INDUSTRY ACCESS & HIRE PTY LTD ACN 124 755 193 |
Fourth Respondent
| SIMON ROBERT USALJ |
Fifth Respondent
| DOMINIC USALJ |
Sixth Respondent
| FILOMENA USALJ |
Seventh Respondent
| JOSEPH USALJ |
Eighth Respondent
| ANTOINETTE FRANKLAND |
Ninth Respondent
| CRAIG FRANKLAND |
Tenth Respondent
REASONS FOR JUDGMENT
Introduction
The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“AMWU”) seeks pecuniary penalties against the fifth and tenth respondents pursuant to the Workplace Relations Act 1996 (“WRA”) and the Fair Work Act 2009 (“FWA”) by reason of their involvement in the first and fourth respondents’ failure to pay certain entitlements to various of their employees.
Due to the liquidation of the four corporate respondents, the proceedings as against them are stayed by virtue of s.471B of the Corporations Act 2001. Nevertheless, the proceedings were dismissed as against the second respondent on 30 November 2009 and leave to discontinue against the third respondent and the fourth respondent (“Industry Access”) was granted on 5 April 2011.
In relation to the respondents who are natural persons, the proceedings were discontinued against the sixth respondent on 14 February 2011, dismissed against the seventh and eighth respondents on 16 November 2010 and dismissed against the ninth respondent on 30 November 2009, leaving the fifth respondent, Simon Usalj, and the tenth respondent, Craig Frankland, as the only active respondents.
Agreed statements of facts
The parties filed an agreed statement of facts and a supplementary agreed statement of facts. Relevant agreed facts are summarised below.
The first respondent (“Carlton”) carried on a business installing and maintaining large scale air conditioning systems on commercial and industrial sites. Carlton conducted its business from a factory and also performed work on a range of commercial and industrial sites. Its workers were divided into “factory” workers and “site” workers. On 16 June 2009 Carlton went into liquidation and, as a result, the third respondent commenced conducting Carlton’s on-site work whilst the Industry Access commenced performing Carlton’s factory work. Industry Access took over Carlton’s liability to pay entitlements to the factory workers. The third respondent traded for approximately twelve months after 16 June 2009 and Industry Access traded for approximately three months after 16 June 2009 but both ultimately also went into liquidation.
Mr Usalj was a director of Carlton in charge of the day-to-day management of Carlton and Industry Access and responsible, in a practical sense, for ensuring that they complied with their obligations to their employees. Mr Frankland was the sole shareholder and director of Industry Access and active, along with Mr Usalj, in its day-to-day management.
All of Carlton’s relevant conduct occurred prior to 1 July 2009 when the FWA replaced the WRA. Some of Industry Access’s conduct occurred prior to 1 July 2009 and some occurred on or after that date.
Carlton was bound by the Carlton Sheetmetal Pty Ltd On-Site Construction Collective Agreement for Sydney 2006-2008 (“Collective Agreement”). Under that agreement, Carlton was required to pay superannuation to employees bound by the Collective Agreement in the following manner:
a)from 6 February 2006 – a superannuation payment of $100 per week to each employee bound by the agreement;
b)from 1 March 2007 – a superannuation payment of $105 per week to each employee bound by the agreement; and
c)from 1 March 2008 – a superannuation payment of $110 per week to each employee bound by the agreement.
Carlton breached the provisions of the Collective Agreement by failing to pay superannuation entitlements to the following site employees in the following amounts:
a)Mladen Barasic $245.00;
b)Ian Blacklock $550.00;
c)Graham Berry $660.00;
d)Gordon Todd $2,090.00;
e)Wayne Brooks $330.00;
f)John Franic $1,675.00;
g)Andrew Ormerod $440.00;
h)Jason Hoste $1,882.39;
i)Mark Edwards $2,200.00; and
j)Melchor Culibao $355.00.
In total, Carlton failed to pay $10,427.39 to those site employees in respect of superannuation.
Carlton was also required by the Collective Agreement to make a redundancy contribution of $80 per week to employees bound by the Collective Agreement. Carlton breached the provisions of the Collective Agreement by failing to pay the following amounts in respect of redundancy contributions to the following site employees:
a)Mladen Barasic $560.00;
b)Ian Blacklock $400.00;
c)Graham Berry $400.00;
d)Gordon Todd $1,520.00;
e)Wayne Brooks $560.00;
f)John Franic $1,200.00;
g)Andrew Ormerod $480.00;
h)Jason Hoste $2,400.00;
i)Mark Edwards $1,680.00;
j)Zelco Tipuric $560.00;
k)George Papas $160.00;
l)Melchor Culibao $400.00; and
m)Louikas Haniotis $560.00.
In total, the first respondent failed to pay $10,880.00 in respect of those site employees’ redundancy contributions.
In relation to the factory employees, Carlton was bound by the Metal, Engineering and Associated Industries (Superannuation) Award (“Superannuation Award”). That award required Carlton to make payment, for the benefit of each employee bound by the award, of such superannuation contributions as would avoid it being required to pay the superannuation guarantee charge. Carlton breached the provisions of the Superannuation Award by failing to pay the following amounts in relation to superannuation for the benefit of the following factory employees:
a)Raymond Murphy $2,368.28;
b)Ly Lin $3,802.59;
c)Ek Channour $3,569.19;
d)Ly Ing $4,930.64;
e)Long Yim $3,215.75;
f)Peter Vasakovski $2,057.09;
g)Chris Friday $4,826.65;
h)Eric Conception $3,601.49;
i)Leopald Rajci $4,803.20;
j)Drago Mrljak $2,107.21;
k)Wayne Donald $4,258.18;
l)Ron Brooks $664.75;
m)Kim Siden $4,331.38;
n)Louis Chircop $4,160.97;
o)Borey Chan $2,295.44; and
p)Raymond De Luca $3,317.86.
In total, Carlton failed to pay $54,310.67 in superannuation contributions for the benefit of certain of its factory workers covered by the Superannuation Award.
Carlton was also bound by the Metal, Engineering and Associated Industries Award 1998 (“Award”), which required it to provide a prescribed period of notice, or make a prescribed payment in lieu of notice, to effect the termination of employment of employees bound by the Award and to pay a prescribed amount of severance pay in the event that an employee bound by the Award was made redundant. In breach of the Award, Carlton failed to provide one factory employee, Long Yim, with the prescribed period of notice or to make the prescribed payment in lieu of notice when he was entitled, on termination, to a period of three weeks’ notice or $2,067.96 in lieu of notice. Carlton also failed to pay Mr Yim severance pay of $4,825.24 to which he was entitled under the Award when he was made redundant. The respondents initially denied that Mr Yim was made redundant or that he was entitled to any severance payment but that denial was withdrawn on 7 February 2011 as a compromise.
In total, Carlton failed to pay $82,511.26 in employee entitlements.
From 11 June 2009, Industry Access was bound by the Superannuation Award. It breached the Superannuation Award in relation to five factory employees who became its employees on or from 11 June 2009 by failing to pay the following amounts for the benefit of the following employees:
a)Raymond Murphy $1,121.82;
b)Ly Lin $211.20;
c)Kim Siden $208.16;
d)Louis Chircop $193.14; and
e)Raymond De Luca $138.71.
Of Mr Murphy’s entitlement, $222.00 was referable to the period up to 30 June 2009 and $899.82 was referable to the period commencing on 1 July 2009. The other four employees’ entitlements were referable to the period up to 30 June 2009.
In total, Industry Access failed to pay $1,873.03 in respect of superannuation for the benefit of those five employees.
From 11 June 2009 Industry Access was also bound by the Award but failed to provide a prescribed period of notice or to make a prescribed payment in lieu of notice for termination to three factory employees as the Award required:
a)Raymond De Luca – on termination on 30 June 2009, he was entitled to one week’s notice of termination or payment in lieu. He was paid no sum in lieu of notice, leaving $770.61 outstanding;
b)Ly Lin – on termination on 15 July 2009, he was entitled to three weeks’ notice of termination or payment in lieu. He was paid two weeks’ notice, leaving $782.42 outstanding; and
c)Kim Siden – on termination on 15 July 2009, he was entitled to four weeks’ notice of termination or payment in lieu. He was paid two weeks’ notice, leaving $1,541.90 outstanding.
In total, Industry Access failed to pay those three employees $3,094.93 in lieu of notice.
Industry Access further breached the provisions of the Award by failing to pay two factory employees severance pay when they were made redundant on 15 July 2009. Mr Lin was entitled to $5,476.94 whilst Mr Siden was entitled to $7,706.40 as severance pay. The respondents initially denied that these two employees were made redundant or that they were entitled to any severance payment but that denial was withdrawn on 7 February 2011 as part of a compromise. In total, Industry Access failed to pay $13,183.34 severance pay to those employees.
Industry Access was bound by the Award to pay a proportionate amount of annual leave in the event that an employee bound by the Award was terminated. In breach of the Award, Industry Access failed to pay Mr Lin, whose employment was terminated on 15 July 2009, $691.12 in respect of annual leave.
In total, Industry Access failed to pay $18,842.42 in employee entitlements.
It was agreed that Mr Usalj was involved, within the meaning of s.728 of the WRA and s.550 of the FWA, in each of Carlton and Industry Access’s contraventions. It was also agreed that Mr Frankland was involved, within the meaning of s.728 of the WRA and s.550 of the WRA, in each of Industry Access’s contraventions.
It was further agreed that neither Mr Usalj nor Mr Frankland had been found by a court to have contravened, nor to have been an accessory to another’s contravention of, a workplace law or an industrial instrument and that they had adopted a co-operative approach to the resolution of these proceedings.
A review of the Collective Agreement reveals that Carlton’s superannuation obligations under it commenced on 6 February 2007, not 6 February 2006 as the parties agreed. The Court will not base a judgment on facts which are shown to be incorrect: Termijtelen v Van Arkel [1974] 1 NSWLR 525; Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221; Damberg v Damberg (2001) 52 NSWLR 492. I find that Carlton’s superannuation obligations commenced on 6 February 2007. Otherwise, I find the facts agreed by the parties and set out in [5] to [24] above to be proved.
Evidence
In addition to relying on the agreed statement of facts and the supplementary agreed statement of facts, the AMWU read the affidavit of Greg Cummings affirmed 14 October 2009. Mr Cummings is an industrial officer employed by the AMWU who deposed that in February 2006 he began to receive calls from its members employed by Carlton stating that their superannuation contributions were not being paid. He further deposed that in or about March 2008 the AMWU lodged a dispute with the Australian Industrial Relations Commission regarding Carlton’s failure to pay superannuation and redundancy contributions. Mr Cummings deposed to several meetings which the AMWU had with Carlton and annexed to his affidavit copies of related correspondence. It is apparent from Mr Cummings’s affidavit that, commencing in 2008 and until its liquidation, Carlton was often in arrears in its payments in respect of employees’ superannuation and redundancy contributions, that periodically those arrears would be addressed in whole or in part and that Carlton and its representatives, including Mr Usalj, made undertakings from time to time to address the arrears which were outstanding at the time those undertakings were given. It appears from the affidavit that not all those undertakings were honoured.
The respondents read the affidavit of Mr Usalj sworn 26 January 2011 and the affidavit of Mr Frankland sworn 14 February 2011. Mr Usalj also gave oral evidence.
In his affidavit Mr Usalj deposed to the business difficulties experienced by Carlton and to the fact that it ultimately went into liquidation because of insufficient work. He deposed that:
It was not a deliberate act by any of the respondents to deprive the workers of their entitlements
and that the owners and “management” of the various entities in the group had essentially lost everything because of the closure of the business and other unrelated businesses. He deposed that he, Mr Frankland and the sixth, seventh, eighth, and ninth respondents had lost their homes, were being sued by the Commonwealth Bank for debts of approximately $5 million dollars pursuant to guarantees and that Bankwest was also claiming approximately $3 million dollars against him, the eighth respondent and Mr Frankland in relation to the sale of an unrelated business/property. He deposed that the payroll for the whole group was over $100,000 per week, that is to say, over $5 million per year.
In his oral evidence, Mr Usalj said that at its peak Carlton had over 400 employees and that he had been involved in the company for 23 years. He said that he had been made bankrupt on the morning of the hearing in these proceedings on 5 April 2011. He conceded that he had understood the terms of the Collective Agreement although he did not understand the Award as well as he did the Collective Agreement. Nevertheless, he knew that Carlton had to make superannuation contributions, pay redundancy contributions, severance pay and pay in lieu of notice. He also knew that Industry Access had to pay superannuation contributions and pay in lieu of notice. He knew that entitlements had to be paid but said that at certain periods the company did not have enough money to pay them. He also said that once the companies went into liquidation it was the responsibility of the liquidator to attend to redundancy payments payable at that time but that when he was operating the business he did not believe that the companies owed some of the redundancy payments which had subsequently been agreed.
Mr Usalj also said that he had personally apologised to former employees of the companies whom he had encountered, had sold property to try to pay the outstanding entitlements and had offered to try to get some money from a third party to assist him to make those payments. He deposed that $18,411.45 had been paid to employees since 4 February 2010.
In his affidavit Mr Frankland deposed that he had worked for the Carlton group for 17 years and that he was made bankrupt on 28 September 2010. He deposed that the business lacked work, that the global financial crisis impacted on the building industry and that although they were tendering on new jobs they were not successful and the work ran out. He deposed that shortly after the employees were terminated, Industry Access ceased to trade and later went into liquidation. He also deposed that the deprivation of the workers’ entitlements was not a deliberate act by any of the respondents and he referred to some of the losses of personal assets and recovery actions mentioned in Mr Usalj’s affidavit. Mr Frankland stated that he was now working as an estimator in the construction industry earning $60,000 per annum and his wife, who now worked part-time, owes approximately $60,000 on her credit cards.
Messrs Usalj and Frankland also tendered a bundle of documents tending to evidence the financial difficulties they have suffered.
Relevant legislation
Carlton’s admitted breaches and Industry Access’s admitted breaches in relation to superannuation payments referrable to the period before 1 July 2009 and non-payment of pay in lieu of notice owed to Mr De Luca were governed by the WRA. On 1 July 2009, after Carlton went into liquidation but while Industry Access was still trading, the provisions of the WRA relevant to these proceedings were repealed by sch.1 to the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009 (“FW(TPCA) Act”). Nevertheless, item 11 of sch.2 to the FW(TPCA) Act provides that the WRA continues to apply on and after its repeal to conduct which occurred before the repeal. Consequently, the WRA continues to apply to these proceedings and to the issues which the proceedings raise concerning events prior to 1 July 2009.
Industry Access’s admitted breaches other than the ones referred to above at [33] are governed by the FWA. The operation of the relevant provisions of the FWA and related legislation will be considered below at [40] to [45].
In relation to breaches of the WRA, s.719 was the provision of that Act relevant to the conduct the subject of these proceedings. It relevantly stated:
719 Imposition and recovery of penalties
(1) An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
(2) Subject to subsection (3), where:
(a) 2 or more breaches of an applicable provision are committed by the same person; and
(b) the breaches arose out of a course of conduct by the person;
the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.
(3) …
(4) The maximum penalty that may be imposed under subsection (1) for a breach of an applicable provision is:
(a) 60 penalty units for an individual; …
Section 717 relevantly stated:
717 Definitions
In this Part:
applicable provision, in relation to a person, means:
(a) a term of one of these that applies to the person:
(i) …
(ii) …
(iii) an award;
(iv) a collective agreement; …
By virtue of s.727, the presently relevant provisions of s.719 were civil remedy provisions.
Section 728 relevantly stated:
728 Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2) For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Section 718(1) of the WRA provided that the AMWU, as an organisation of employees, might apply for a penalty under the WRA in respect of breaches of awards and collective agreements governed by the WRA.
Upon the repeal of the WRA and the commencement of the FWA, the Collective Agreement, the Superannuation Award and the Award became transitional instruments governed by item 2 of sch.3 to the FW(TPCA) Act. In this regard, s.4 of the WRA defined “workplace agreement”, which is one of the transitional instruments referred to in sch.3 to the FW(TPCA) Act, to include collective agreements. Item 2 of sch.3 to the FW(TPCA) Act provides that such transitional instruments continue in existence despite the repeal of the WRA.
Item 2 of sch.16 to the FW(TPCA) Act provides that a person must not contravene the terms of award-based transitional instruments or the terms of agreement-based transitional instruments which apply to that person. Item 16 of sch.16 to the FW(TPCA) Act provides that pt.4-1 of the FWA, which includes ss.539, 550 and 557, applies to item 2 of sch.16 to the FW(TPCA) Act as if that item were part of the FWA.
Section 539, as affected by item 16 of sch.16 to the FW(TPCA) Act, relevantly provides:
539 Applications for orders in relation to contraventions of civil remedy provisions
(1)A provision referred to in column 1 of an item in the table in subsection (2) is a civil remedy provision.
(2)For each civil remedy provision, the persons referred to in column 2 of the item may, subject to sections 540 and 544 and Subdivision B, apply to the courts referred to in column 3 of the item for orders in relation to a contravention or proposed contravention of the provision, including the maximum penalty referred to in column 4 of the item.
Standing, jurisdiction and maximum penalties Item Column 1
Civil remedy provisionColumn 2
PersonsColumn 3
CourtsColumn 4
Maximum penalty38 [item] 2(1) [of sched.16 to the FW(TPCA) Act] … (a) an employee;
(b) an employer;
(c) an employee organisation;
(d) an employer organisation;
(e) an inspector
(a) the Federal Court;
(b) the Federal Magistrates Court;
(c) an eligible State or Territory court
60 penalty units
Section 546 provides that the Court may impose a pecuniary penalty on an individual up to the maximum penalty relevant to the contravention in question as identified in the table in s.539.
Section 550 of the FWA states:
550 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Section 557 of the FWA, as affected by item 16 of sch.16 to the FW(TPCA) Act, relevantly provides:
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.
(2) The civil remedy provisions are the following:
[item 2 of sch.16 to the FW(TPCA) Act]
Applicant’s submissions
The AMWU submitted that Carlton’s breaches in which Mr Usalj was involved occurred over a sustained period of time, affected twenty-nine employees and amounted to a substantial amount of unpaid employee entitlements, namely, $82,511.26. The AMWU submitted that Messrs Usalj and Frankland were both involved in the breaches committed by Industry Access which resulted in employee entitlements totalling $18,842.42 being unpaid and that although Industry Access’s contraventions occurred over a shorter period of time, affected a small number of employees and amounted to a smaller amount of unpaid employee entitlements than Carlton’s contraventions, the conduct still warranted “meaningful and effective penalty”.
The AMWU submitted that the respondents’ submissions that the breaches had been a result of the negative impact of the global financial crisis should not be accepted, at least as far as Carlton was concerned. It submitted that the conduct engaged in by Carlton pre-dated the failure of the business and the global financial crisis, in that issues with the non-payment of superannuation and redundancy contributions by Carlton had been apparent since 2006 and Carlton had acknowledged the non-payment of these contributions since at least January 2008.
The AMWU submitted that the breaches by Carlton were not simply honest mistakes but were deliberate breaches. It submitted that the unpaid entitlements were basic entitlements which did not involve any complicated legal principle and that the requirement to pay the entitlements would have been well-known to Mr Usalj. The AMWU did accept that Industry Access’s contraventions were influenced by business failure and circumstances beyond its control and the control of Mr Usalj and Mr Frankland and that the breaches in relation to severance pay were not deliberate, but submitted that the breaches in relation to superannuation, payment in lieu of notice and annual leave were deliberate.
The AMWU further submitted that the affected employees had suffered significant and irrevocable loss because it is unlikely that the underpayments would be recovered from Carlton or Industry Access as they are now in liquidation and proceedings against them would not assist in the recovery of the unpaid amounts. It submitted that meaningful and effective penalties should be imposed on Messrs Usalj and Frankland.
The AMWU accepted that the repeated breaches by Carlton arose out of the same course of conduct but submitted that the breaches of each distinct agreement or award term should be treated as separate breaches and addressed by separate penalties. It submitted that Carlton had engaged in five breaches, namely, failing to pay superannuation entitlements under the Collective Agreement as well as under the Superannuation Award, failing to pay redundancy contributions, failing to make payments in lieu of notice of termination and failing to pay severance pay.
In its supplementary written submissions on penalty the AMWU submitted that Industry Access had engaged in two contraventions of the WRA. These were identified as the pre-1 July 2009 failure, in breach of the Superannuation Award, to pay superannuation contributions for the benefit of five employees and the pre-1 July 2009 failure, in breach of the Award, to pay Mr De Luca a sum in lieu of notice. The AMWU further submitted that Industry Access had engaged in four contraventions of the FWA in respect of conduct on and after 1 July 2009. These were identified as its further failure, in breach of the Superannuation Award, to pay superannuation contributions for the benefit of Mr Murphy and its failure, in breach of the Award, to pay severance pay, accrued annual leave and sums in lieu of notice to Mr Lin and Mr Siden as detailed above at [19] to [21].
The AMWU also submitted that as the breaches of the Superannuation Award concerning Mr Murphy and the Award provisions concerning payment in lieu of notice had been committed under both the WRA and the FWA, they should be penalised under both of those Acts. It submitted that although the same provision of the Superannuation Award was breached in June and July 2009, the acts in question ought not to be regarded as one course of conduct. The same submission was made in relation to the June and July 2009 breaches of the Award provisions requiring payments in lieu of notice.
The AMWU submitted that Carlton was a medium sized enterprise but said that the size of the business was of limited relevance when determining penalties.
It was submitted that Messrs Usalj and Frankland had not shown real contrition for their actions and had not given evidence that they would not reoffend. However, the AMWU did acknowledge Messrs Usalj and Frankland had taken some corrective action by making a payment of $17,841.45 to six employees in February 2010 in respect of entitlements to annual leave and payment in lieu of notice of termination.
The AMWU conceded that since the initiation of these proceedings the respondents had co-operated in the proceedings’ resolution but submitted that Mr Usalj’s co-operation had only commenced at that point and that previously the breaches for which he was responsible were sustained and serious. It was also submitted that prior to the proceedings Mr Usalj had made commitments to address the breaches voluntarily but had failed to honour them.
The AMWU submitted that the penalties imposed by the Court should contain an element for specific deterrence and that the respondents’ current financial position was irrelevant to the determination of whether and what penalties should be imposed.
Fifth and tenth respondents’ submissions
Messrs Usalj and Frankland submitted that the circumstances of the breaches placed the matter at the lower end of the scale in terms of seriousness given the short period of time and the size of the Carlton Group and noted that since the commencement of the proceedings they had paid $18,411.45 in reduction of amounts owing.
They submitted that the losses involved approximately thirty workers over a relatively short period of time. They submitted that there had been no intentional diversion or accumulation of assets to their benefit and that of the outstanding entitlements of $82,511.26, approximately half of that amount had been paid to the workers by the federal government’s General Employee Entitlements and Redundancy Scheme (“GEERS”). The respondents further submitted that the total of the underpayments amounted to approximately one week’s payroll for the businesses, implying that when compared with the total obligations which Carlton and Industry Access owed to their employees and satisfied, the amount outstanding was comparatively small.
Messrs Usalj and Frankland further submitted that there was no deliberate act to deprive the workers of their entitlements or to defraud them and they said that the global financial crisis had impacted on the building industry. They submitted that the three workers who had been made redundant had been made so because there was no work for them because of the global financial crisis’s negative impact on the business but that, more generally, the companies had been focused on keeping their staff in employment.
They further submitted that Carlton, Industry Access and the third respondent, being the relevant corporate entities, are in liquidation and that both Messrs Usalj and Frankland are now bankrupt. They also pointed to the fact that Mr Usalj who had had 27 years with the business was now working in a hotel and Mr Frankland who had worked in the business for 17 years was now working as somebody else’s estimator. It was also submitted that Mr Usalj had demonstrated contrition.
The respondents submitted that the process of determining the employees’ entitlements was complex and time consuming but that they had acted responsibly in that task. They submitted that some of the workers in the factory had in fact been overpaid their superannuation entitlements in 2008 and that there was no evidence that amounts which the AMWU had periodically pursued with Carlton were the underpayments identified in the agreed statement of facts.
Mr Frankland submitted that he had not been aware that redundancy payments had been due and he had disputed those claims.
The respondents also submitted that Industry Access’s breaches of the Award and of the Superannuation Award which occurred in June and July 2009 should be considered “in totality”, saying that it would be artificial to increase or duplicate the overall penalty because of the commencement of new legislation.
Mr Frankland submitted that he had walked into an already difficult situation and that his contraventions should be seen to be at the lower end of the spectrum meriting little or no penalty.
Messrs Usalj and Frankland submitted that they would be unlikely to be able to pay anything more than moderate penalties and that even if modest penalties were imposed they would suffer hardship in satisfying them.
Considerations as to penalty
As Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14 at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a 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”. Tracey J adopted those considerations and described them as follows:
· 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 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.
Considerations relevant to this case are:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that 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 similar previous conduct by the respondents;
e)whether the breaches are properly distinct or arose out of the one course of conduct;
f)the deliberateness of the breaches;
g)whether in the running of the businesses the fifth and tenth respondents had a culture of compliance;
h)contrition, corrective action and co-operation with the enforcement authorities; and
i)the need for specific and general deterrence.
The nature and extent of the conduct which led to the breaches
Over a period of time up to the point when Carlton was placed in liquidation in June 2009 Mr Usalj had been involved in that company’s persistent failure to pay all of its employees all of their entitlements. Mr Usalj was similarly involved, together with Mr Frankland, in Industry Access’s failure to pay all of its employees all of their entitlements during the period it was operating part of Carlton’s former business. Mr Usalj was responsible for Carlton’s day-to-day management and for ensuring that Carlton and Industry Access complied with their obligations to their employees and he and Mr Frankland were both involved in the day-to-day management of Industry Access.
The amounts outstanding in respect of Carlton and Industry Access were $82,511.26 and $18,842.42 respectively. It was submitted by the AMWU, and not contested by Messrs Usalj and Frankland, that the superannuation contributions which were not paid were also not covered by GEERS with the result that, with the liquidation of the corporate respondents, those entitlements are likely never to be recovered by the underpaid employees. In relation to the redundancy contributions, they would appear to be payments addressed to the very situation in which the employees ultimately found themselves and in respect of which the respondents’ failures left them exposed.
Carlton’s failure from at least 2008 to pay its employees their full entitlements was the subject of complaints by the AMWU and led to the initiation of proceedings in the Australian Industrial Relations Commission. Although some rectification of arrears was made, it appears that Carlton pursued a course of conduct which continued to be the subject of the AMWU’s attentions and representations.
The circumstances in which that conduct took place
Notwithstanding the AMWU’s submissions to the contrary, I do accept that the ultimate failure of the businesses was related in some way to the global financial crisis and to the downturn of the building industry which was one of the products of that crisis, although it is also apparent that Carlton’s failures to make full payments pre-dated the worst of the global financial crisis. However, the situation in relation to Industry Access is quite different as it started operations during the global financial crisis and must have been affected by it.
Mr Usalj conceded in cross-examination that he was aware that Carlton had obligations to make the payments which were not paid or were underpaid and, to that extent, the relevant contraventions can be understood to have been deliberate and not inadvertent. Logically, the same conclusion must be reached in relation to Industry Access’s contraventions, to the extent that Mr Usalj was involved in them. Nevertheless, I accept the AMWU’s submission that Industry Access’s breach of its severance pay obligations was not deliberate.
The nature and extent of any loss or damage sustained as a result of the breaches
The losses suffered by the individual employees have been set out above at [9] to [22].
The rates of pay appearing in the Collective Agreement indicate that the employees in question were not highly paid employees and yet some of the amounts owed to them are not insubstantial. Those employees were entitled to enjoy the full benefit of the entitlements associated with their positions, as provided in the Collective Agreement and in the two awards, but it is unlikely that the losses which they have sustained will be recovered given that Carlton and Industry Access are in liquidation.
The fact that GEERS has compensated the employees to some extent cannot be a matter which sounds in favour of the respondents. The availability of government support for individuals such as the respondents’ employees provides no basis to minimize the obvious seriousness of the respondents’ conduct. In particular, employers should not be permitted to think that their conduct is any less worthy of censure simply because, through GEERS, the taxpayer has somewhat ameliorated the financial consequences of that conduct. For the Court to approach the matter in any other way might have the effect of inviting unscrupulous employers to believe that GEERS payments will enable them to escape some aspect of punishments to which they would ordinarily be liable.
Whether there has been similar previous conduct by the respondents
The parties submitted that the respondents have not engaged in similar conduct prior to the events the subject of these proceedings. I accept those submissions.
Whether the breaches are properly distinct or arose out of the one course of conduct
The parties agreed that there were five breaches by Carlton and six breaches by Industry Access. Carlton’s contraventions were set out in the agreed statement of facts in the following terms:
The First Respondent has breached applicable provisions within the meaning of s.719 of the WR Act with respect to the following employee entitlements:
(i)Superannuation as required by the Collective Agreement. The unpaid amount of superannuation is $10,427.39;
(ii)Redundancy contributions as required by the Collective Agreement. The unpaid amount of redundancy contributions is $10,880.00;
(iii)Superannuation as required by the Superannuation Award. The unpaid amount of superannuation is $54,310.67;
(iv)Payment in lieu of notice of termination as required by the Award. The unpaid amount of payment in lieu of notice of termination is $2,067.96;
(v)Severance pay as required by the Award. The unpaid amount of severance pay is $4,825.24.
Industry Access’s contraventions were set out in the supplementary agreed statement of facts:
The Fourth Respondent has breached applicable provisions within the meaning of s.719 of the WR Act with respect to the following employee entitlements:
(i)Superannuation as required by the Superannuation Award. The unpaid amount of superannuation is $973.21;
(ii)Payment in lieu of notice of termination as required by the Award. The unpaid amount of payment in lieu of notice of termination is $770.61.
The Fourth Respondent has breached applicable provisions within the meaning of item 2(1) of Schedule 16 of the TPCA Act with respect to the following employee entitlements:
(i)Superannuation as required by the Superannuation Award. The unpaid amount of superannuation is $899.82;
(ii)Payment in lieu of notice of termination as required by the Award. The unpaid amount of payment in lieu of notice of termination is $2,324.23.
(iii)Severance pay as required by the Award. The unpaid amount of severance pay is $13,183.34;
(iv)Annual leave as required by the Award. The unpaid amount of annual leave is $691.12.
I accept that the conduct by Carlton and Industry Access in breach of the Collective Agreement and the awards was, in each case, a single course of conduct, repeated over a period of time. There is nothing to indicate that the companies’ failure to pay particular entitlements amounted to a number or a series of individual acts which should properly be seen to be distinct and separate. However, each provision of the Collective Agreement and of the awards represents a separate obligation which the corporate respondents were required to observe: Gibbs v Mayor, Councillors & Citizens of the City of Altona (1992) 37 FCR 216. As a result, the courses of conduct which led to the contraventions of those provisions should be seen to be separate and distinct courses of conduct leading to a finding that there have been five contraventions on the part of Carlton and six contraventions on the part of Industry Access.
However, by an accident of history, the legislative regime changed on 1 July 2009. That change appears unavoidably to create the artificial situation in this case that, in two instances, what would otherwise be a single course of conduct is one course of conduct under the WRA and another course of conduct under the FWA. Those instances are Industry Access’s failure, first in June 2009 and then in July 2009, to pay superannuation pursuant to the Superannuation Award and sums in lieu of notice pursuant to the Award. These failures attract penalties under the WRA and further penalties under the FWA.
The deliberateness of the breaches
As already noted, I am willing to accept, based on the parties’ submissions, that the failure by Industry Access to pay severance payments ought not be considered to be a deliberate act, in that it did not believe that it had an obligation in that regard. However, Mr Usalj’s evidence satisfies me that Carlton’s contraventions were not inadvertent but were undertaken knowingly, in the sense that it knew that it should have made the payments and yet did not make them. Similarly, Industry Access’s contraventions must, with the exception of the severance payments, be considered to have been deliberate, at least by reason of Mr Usalj’s understanding of the companies’ obligations. Whether Mr Frankland had a subjective appreciation of the entirety of Industry Access’s obligations was not specifically addressed in the evidence but the statement in his affidavit that “[i]t was not a deliberate act by any of the respondents to deprive the workers of their entitlements” appears to be a statement that the losses suffered by the employees were not intended, not a statement that Industry Access’s failure to make payments when they were due was inadvertent. I assume Mr Frankland did not wish Industry Access to be a commercial failure but that is not the question.
Whether in the running of the businesses the fifth and tenth respondents had a culture of compliance
As far as Carlton’s operations are concerned, although I accept that the amounts unpaid were not a large proportion of the corporate respondents’ financial obligations to their employees, the evidence of Mr Cummings satisfies me that a culture of compliance did not exist in that company. It persistently failed over many months to make full and complete payment of employees’ entitlements. It has not been demonstrated that there was a culture of compliance in Industry Access and it seems unlikely that there was, given that superannuation payments were not made while the business was still operating. Further, no evidence was put before the Court, or even submissions made, to the effect that the companies’ contraventions arose out of failures in an otherwise effective compliance program.
Contrition, corrective action and co-operation with the enforcement authorities
Mr Usalj gave evidence that he had apologised to those of his employees whom he had encountered since the collapse of the companies. He said that he had not approached every employee because he was concerned about the potential for an aggressive response from some of them. Mr Frankland was unable to come to Court for the hearing because of his current employment situation and I draw no adverse inferences from his absence. I also note that notwithstanding what must have been considerable financial difficulties confronting Messrs Usalj and Frankland, they arranged for payments totalling $18,411.45 to be made in reduction of the companies’ obligations to their employees after the commencement of these proceedings. Otherwise, however, Messrs Usalj and Frankland have not expressed regret for the losses which their former employees have suffered. Nor have they indicated that similar conduct would not occur in the future. However, as a practical matter, given their bankruptcies, it is unlikely that they will be in a position to manage a business for some time to come and so this aspect assumes less relevance than it might in other circumstances.
The AMWU was pursuing Carlton over its underpayments from early 2008 and notwithstanding that undertakings to correct arrears were given, Carlton was still underpaying its employees when it became insolvent, thereby leaving those employees out of pocket. There is nothing before the Court from which conclusions may be drawn concerning Industry Access’s co-operation with the AMWU prior to the commencement of the proceedings. Nevertheless, the AMWU accepted that, once the proceedings had commenced, the respondents were co-operative and, in this regard, I note the significant narrowing of the issues during the interlocutory stages of these proceedings and the considerable amount of work which appears to have been undertaken by all parties to reach agreement on as much as possible. Plainly, this included the parties’ agreement on the facts underlying these proceedings. All of these matters have demonstrated a willingness on the part of Messrs Usalj and Frankland to face up to the events of the past and to resolve and clarify as many issues as possible which has been of benefit to the AMWU, to the Court and to other litigants.
The need for specific and general deterrence
Dealing first with the question of general deterrence, the protection which the law provides to workers should be enforced by the courts and this involves sending a message that contravening conduct identified by the Court will not escape punishment. A penalty should be imposed to serve as a warning to others not to offend: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, per Lander J at 559 [93]; CPSU, The Community & Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 per Finkelstein J at 231 [9]. A price should be placed on a contravention which is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 per French J at 52,152.
Had Messrs Usalj and Frankland been diligent in the discharge of their duties as directors and managers of Carlton and of Industry Access, the entitlements which remained owing to the companies’ employees when they became insolvent would not have been outstanding. Even though a company may be in financial difficulties, that is no excuse for it not paying its employees’ proper entitlements. Consequently, some element for general deterrence is necessary to ensure that employers understand that their own difficulties do not relieve them of their obligations to their employees.
Although Messrs Usalj and Frankland did not express contrition for their involvement in the failure by Carlton and Industry Access to meet their obligations to their employees, Mr Usalj’s evidence does satisfy me that he did feel genuine regret for the situation in which the companies’ employees were placed. There can also be no doubt that the financial consequences of the commercial failures of Carlton and Industry Access have been very severe for both Mr Usalj and Mr Frankland and are likely to impact on their lives for a considerable period to come. Further, by reason of their bankruptcies it is unlikely that they will be in a position for some years to have decision-making roles similar to those which they held in Carlton and Industry Access. In the circumstances, I consider it unnecessary to include in the penalties which will be imposed a significant element for special deterrence.
Further matters
Carlton was guilty of five contraventions and Industry Access guilty of six. Mr Usalj was involved in each of these contraventions and he is thus liable to eleven penalties. The maximum penalty for each is $6,600, rendering him potentially liable for penalties totalling $72,600. Mr Frankland has accessorial liability only for the contraventions committed by Industry Access and is thus liable to six penalties and to a maximum total penalty of $39,600.
In relation to the courses of conduct engaged in by Industry Access which commenced under the WRA and continued under the FWA, although the question of a single course of conduct attracting a penalty under the WRA as well as one under the FWA is only of academic interest as far as the corporate respondents are concerned, it is a matter of practical significance for Messrs Usalj and Frankland who are to be penalised for having been involved in the corporate respondents’ contraventions. The issue raises the question of the appropriate penalties to be imposed in the circumstances.
The respondents submitted that the possibility of them being over-penalised by reason of the change in legislation should be addressed when considering the penalties in their totality. However, contrary to this submission, before applying the totality principle the Court must first identify what penalties are appropriate to each contravention of the legislation. Even so, in doing this the Court should be alert to the possibility that to treat related contraventions as if they were entirely separate might lead to the imposition of penalties which would be disproportionate to the wrongdoing in question.
Generally, it would not be appropriate to impose more than one penalty in respect of a single course of conduct even it results in more than one contravention. It was said in Pearce v R (1998) 194 CLR 610:
To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts. (at 623 [40] per McHugh, Hayne and Callinan JJ)
In Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 397 [42], Stone and Buchannan JJ accepted the proposition that:
Where there are truly two or more incursions into criminal conduct, consecutive sentences will generally be appropriate. Where, whatever the number of technically identifiable offences committed, the prisoner was truly engaged upon one multi-faceted course of criminal conduct, the judge is likely to find concurrent sentences just and convenient. (Attorney-General (SA) v Tichy (1982) 30 SASR 84 per Wells J at 93)
In Construction, Forestry, Mining & Energy Union v Williams (2009) 262 ALR 417 the Full Court of the Federal Court recognised that sometimes a single act of offending conduct will comprise two or more technically identifiable offences. The court recognised that there will be instances where the interrelationship of multiple offences is so intimate that those offences can only be said to arise from a single course of conduct and that in such an instance injustice can only be avoided by imposing concurrent terms, otherwise the offender would be punished more than once for the same criminality. In that case, it was held that it was appropriate to take the single course of conduct into account by imposing separate fines for the two offences which, when aggregated, would represent a single penalty appropriate to punish the single course of conduct concerned.
In this case I am satisfied that, whatever the number of technically identifiable contraventions, Industry Access’s failure to comply with its obligations under the Superannuation Award was a single course of conduct which commenced under the WRA and continued under the FWA. I am of the same view in relation to its failure, under the WRA and the FWA and in breach of the Award, to pay sums in lieu of notice. Consequently, although contraventions of both Acts should be found in respect of each of these two courses of conduct and it is appropriate to impose separate penalties under each Act to reflect this, it would also be appropriate to quantify the penalties for those breaches on the basis that they were each single courses of conduct.
The penalties to be imposed for the contraventions of the WRA and the FWA represented by the failure to make superannuation contributions pursuant to the Superannuation Award will, together, represent the figure appropriate to punish the individual course of conduct. Penalties for the contraventions of the WRA and the FWA represented by the failure to pay sums in lieu of notice pursuant to the Award will be imposed on the same basis.
The amounts outstanding to various of Carlton’s employees in respect of superannuation and redundancy contributions suggest that Carlton failed to make those payments over a reasonably extended period of time. I am therefore satisfied that these failures were not minor or ones which occurred only in the last gasp of Carlton’s operations. Nevertheless, I do note the respondents’ submissions that they had endeavoured to keep their workers in employment and it is to be observed that no complaint has been made that the companies’ employees were not paid their wages. It can be inferred that those wages were, indeed, paid but paid in preference to superannuation and redundancy contributions which would have been less visible to employees.
Nevertheless, there was no evidence to suggest that Messrs Usalj or Frankland personally benefited from the non-payment of these amounts and I am willing to infer that they cut corners in order to keep the businesses afloat which, while undoubtedly of benefit to them, would also have benefited their employees and would, if successful, have in all likelihood led to the presently unpaid entitlements being paid at some point.
Finally, this is a matter where the totality principle is relevant in determining the ultimate penalty to be imposed on Messrs Usalj and Frankland. The principle provides for a final check, once an appropriate penalty has been set for each contravention, to ensure that the total penalty is appropriate in the circumstances: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560.
Penalties
I find that Carlton breached:
a)item 1 of appendix 9 of the Collective Agreement by failing to pay superannuation contributions in respect of the site employees as set out at [9] above;
b)item 2 of appendix 9 of the Collective Agreement by failing to make weekly redundancy contribution payments in respect of the site employees as set out in [11] above;
c)clause 8 of the Superannuation Award by failing to make superannuation contributions for the benefit of the factory employees as set out at [13] above;
d)clause 4.3.1 of the Award by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to the employee indentified in [15] above; and
e)clause 4.4.2 of the Award by failing to pay a prescribed amount of severance pay to the employee identified in [15] above
and thereby contravened the WRA.
I find that Industry Access breached:
a)clause 8 of the Superannuation Award by failing to make superannuation contributions in respect of the employees as set out at [17] above and thereby contravened both the WRA and the FWA;
b)clause 4.3.1 of the Award by failing to provide a prescribed period of notice or make a prescribed payment in lieu of notice to the employees as set out at [19] above and thereby contravened both the WRA and the FWA;
c)clause 4.4.2 of the Award by failing to pay a prescribed amount of severance pay to the employees as set out at [20] above and thereby contravened the FWA; and
d)clause 7.1.11 of the Award by failing to pay a proportionate amount of annual leave in respect of the employee identified at [21] above and thereby contravened the FWA.
The AMWU has sought declarations that the respondents have contravened the WRA, the FWA, the Award and the Superannuation Award. As the corporate respondents are in liquidation it is neither appropriate nor presently possible to make such declarations. To the extent that the prayers for declarations relate to the natural person respondents, they do not seek declarations that Messrs Usalj and Frankland have accessorial liability for the conduct of the corporate respondents but, rather, that they personally contravened the Acts and the awards. The evidence does not support such findings or declarations. However, it does support the findings of fact made earlier in these reasons which, in turn, support the imposition on Messrs Usalj and Frankland of the pecuniary penalties set out below.
When determining the appropriate penalties in these proceedings, I have taken into consideration the matters considered earlier in these reasons. I consider the appropriate penalties in this matter to be:
a)in respect of the fifth respondent, Mr Usalj:
i)$1,000 for his involvement in Carlton’s breach of item 1 of appendix 9 of the Collective Agreement;
ii)$1,000 for his involvement in Carlton’s breach of item 2 of appendix 9 of the Collective Agreement;
iii)$4,000 for his involvement in Carlton’s breach of clause 8 of the Superannuation Award;
iv)$200 for his involvement in Carlton’s breach of clause 4.3.1 of the Award;
v)$500 for his involvement in Carlton’s breach of clause 4.4.2 of the Award;
vi)$100 for his involvement in Industry Access’s breach of clause 8 of the Superannuation Award which contravened the WRA;
vii)$100 for his involvement in Industry Access’s breach of clause 8 of the Superannuation Award which contravened the FWA;
viii)$100 for his involvement in Industry Access’s breach of clause 4.3.1 of the Award which contravened the WRA;
ix)$200 for his involvement in Industry Access’s breach of clause 4.3.1 of the Award which contravened the FWA;
x)$1,200 for his involvement in Industry Access’s breach of clause 4.4.2 of the Award; and
xi)$100 for his involvement in Industry Access’s breach of clause 7.1.11 of the Award;
b)in respect of the tenth respondent, Mr Frankland:
i)$100 for his involvement in Industry Access’s breach of clause 8 of the Superannuation Award which contravened the WRA;
ii)$100 for his involvement in Industry Access’s breach of clause 8 of the Superannuation Award which contravened the FWA;
iii)$100 for his involvement in Industry Access’s breach of clause 4.3.1 of the Award which contravened the WRA;
iv)$200 for his involvement in Industry Access’s breach of clause 4.3.1 of the Award which contravened the FWA;
v)$1,200 for his involvement in Industry Access’s breach of clause 4.4.2 of the Award; and
vi)$100 for his involvement in Industry Access’s breach of clause 7.1.11 of the Award.
The total of the penalties payable by Mr Usalj is $8,500 and the total of the penalties payable by Mr Frankland is $1,800. I am satisfied that these are just and appropriate amounts as aggregate figures.
The AMWU sought orders that the penalties be paid to it but undertook in its written submissions dated 1 April 2011 and in its oral submissions on 5 April 2011 to pay to the workers affected by the breaches any penalties ordered and recovered. There will be an order that the penalties be paid to the AMWU.
The AMWU also sought its costs. However, I am not of the view that Messrs Usalj and Frankland were guilty of the sort of unreasonable act or omission which would justify a costs order under s.824 of the WRA or s.570 of the FWA. Consequently, there will be no order as to costs.
Finally, I note that although the amended application sought, against all the respondents, compensation orders pursuant to s.719(6) and (7) of the WRA and s.545(2)(b) of the FWA these were not referred to in submissions and appear to have been abandoned with the insolvency of the corporate respondents. No submissions were made that the Court was empowered to make such orders against Messrs Usalj and Frankland.
I certify that the preceding one hundred and four (104) paragraphs are a true copy of the reasons for judgment of Cameron FM
Date: 26 July 2011
2
13
4