Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd T/A Yarra Trams (No.2)
[2018] FCCA 3792
•19 December 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION v KDR VICTORIA PTY LTD T/A YARRA TRAMS (No.2) | [2019] FCCA 3792 |
| Catchwords: INDUSTRIAL LAW – Penalties – single breach of s.50 of the Fair Work Act 2009 – genuine misunderstanding of the relevant provisions – no evidence of contrition or remorse – matter going to trial – large company with previously impeccable record – breach occurring in a misguided effort to address a public safety issue. |
| Legislation: Crimes Act 1914, s.4AA Crimes Amendment (Penalty Units) Act 2017 Fair Work Act 2009, ss. 50, 539, 546 |
| Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 |
| Applicant: | AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION |
| First respondent: | KDR VICTORIA PTY LTD T/A YARRA TRAMS |
| File number: | MLG 2296 of 2017 |
| Judgment of: | Judge Riley |
| Hearing date: | 18 October 2018 |
| Date of last submission: | 18 October 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 19 December 2018 |
REPRESENTATION
| Counsel for the applicant: | Robert Reitano |
| Solicitors for the applicant: | Mark Diamond, employee of the applicant |
| Counsel for the respondent: | Frank Parry QC and Matthew Follett |
| Solicitors for the respondent: | Johnson Winter & Slattery |
ORDERS
In respect of the respondent’s breach of s.50 of the Fair Work Act 2009 in June and July 2017, the respondent pay to the applicant a penalty of $15,000 within 14 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2296 of 2017
| AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION |
Applicant
And
| KDR VICTORIA PTY LTD TRADING AS YARRA TRAMS |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the penalties to be imposed for a contravention of the Fair Work Act 2009 (“the Act”) which the respondent was found to have committed in Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd t/a Yarra Trams [2018] FCCA 2002 (“the liability judgment”). In the liability judgment, the respondent was found to have contravened s.50 of the Act by contravening cl.11.8(a) of the Yarra Trams Enterprise Agreement 2015 – Operations (“the enterprise agreement”). More particularly, the contravention consisted of the respondent requiring employees to perform new work as directed rather than in accordance with the arrangements that were in place immediately prior to the change that caused a dispute to be notified on 23 June 2017.
The Act provides that the maximum penalty for a corporation that contravenes s.50 of the Act is 300 penalty units.[1] There was a dispute as to the value of a penalty unit at the relevant time. The value of a penalty unit is set by s.4AA of the Crimes Act 1914. Section 4AA of the Crimes Act 1914 was amended by the Crimes Amendment (Penalty Units) Act 2017. The amendment took effect from 1 July 2017. The amendment increased the value of a penalty unit from $180 to $210.
[1] Section 539 of the Act, item 4; s.546(2)(a) and (b) of the Act.
The applicant argued that the contravention occurred from 23 June 2017 to 6 July 2017. The respondent argued that the contravention had ceased by 26 June 2017, and therefore the increased penalty had no application.
The liability judgment was perhaps not sufficiently clear on this point. However, I accept the applicant’s submission that the contravention continued until 6 July 2017.
In those circumstances, the applicant argued that the higher value of a penalty unity applied. The applicant relied on the decision of Katzman J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557, where her Honour said:
396. Thus, in the present case, for those contraventions that occurred before 28 December 2012, a penalty unit is $110, and for those that occurred on and after that date it is $170. Some of the contraventions, however, occurred both before and after the increased penalty came into effect. The Ombudsman submitted that, where contraventions involve a course of conduct spanning the period both before and after the increase, the higher amount should apply or at least be taken into account. She relied on R v White (BC9101745, NSWCCA, 25 July 1991, unreported), a case in which the Court of Criminal Appeal was concerned to determine the maximum penalty for a conspiracy to defraud the Commonwealth of sales tax which had occurred over a period of time during which the maximum penalty had increased. In that case, Gleeson CJ, with whom Hunt J agreed, said (at 12):
The question whether the relevant maximum penalty in the present case was the penalty as amended or the penalty prior to amendment is one to be answered by reference to the intention of Parliament, which in turn is to be discerned by the application of the ordinary principles of statutory construction. I can see no reason to attribute to Parliament an intention that the amended maximum penalty should apply only in cases where the conspiracy in question was first entered into subsequent to the amendment, and should not apply to conspiracies that were on foot at the time of the amending legislation. In particular I can see no reason for concluding that Parliament intended that conspiracies pursued following the amendment would be punished more severely if they were entered into after the amendment, and less severely if they were entered into prior to the amendment.
397. Lee J, with whom Gleeson CJ and Hunt J agreed, observed that “it would not be inappropriate” for a sentencing judge to bear in mind an increase in penalty that has taken place during the currency of the conspiracy and take it into account in fixing sentence (at 11).
398. While the analogy is not a perfect one, I conclude that by parity of reasoning the same principle applies to contraventions of the FW Act involving a course of conduct which began before the amendment and continued after it came into effect.
Applying that decision, I consider that the higher value of a penalty unit is to be applied in this case. Therefore, the maximum penalty payable by the respondent in this proceeding is $63,000.
The applicant sought a penalty at the high end of the middle range, which I understand to mean about $40,000. The respondent submitted that the court should impose either no penalty or a penalty in the nominal to low range. I understand that to mean a maximum of about $20,000.
The applicant submitted that any penalty should be payable to the applicant, in accordance with the usual position.[2] The respondent did not dispute that.
[2] Section 546(3) of the Act, Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336; (2016) 259 IR 274; [2016] FCAFC 4.
Both parties filed written submissions on penalty. In addition, the respondent relied on the affidavit sworn by Trevor Greer on 5 September 2018 relating to penalty. Mr Greer was cross-examined and re-examined at the penalty hearing on 18 October 2018.
Approach to determining penalty
In the present case, there was a single breach. Consequently, the task of the court is to determine the appropriate penalty for that single breach.
A convenient checklist of the factors that the court might consider in determining penalty in an industrial matter includes the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, with paragraph letters inserted:
(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 had been similar previous conduct by the respondent.
(e)Whether the breaches were properly distinct or arose out of the one course of conduct.
(f)The size of the business enterprise involved.
(g)Whether or not the breaches were deliberate.
(h)Whether senior management was involved in the breaches.
(i)Whether the party committing the breach had exhibited contrition.
(j)Whether the party committing the breach had taken corrective action.
(k)Whether the party committing the breach had cooperated with the enforcement authorities.
(l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
a. the nature and extent of the conduct which led to the breach
The nature and extent of the conduct which led to the breach is more fully described in the liability judgment. For present purposes, it is sufficient to state that the nature of the conduct that led to the breach was a failure by the respondent to comply with a provision of an enterprise agreement by not following the agreed course when a dispute arose.
The extent of the conduct which led to the breach was that the default continued for a period of 14 days. The default continued notwithstanding a number of attempts by the applicant to resolve the dispute, including by explaining why the respondent’s understanding of the relevant provisions was wrong.
b. the circumstances in which that conduct took place
The circumstances in which the contravening conduct took place was that there was a serious safety issue when trams stopped at centre platforms. In such cases, tram drivers were required to open the doors on the right side of the tram. Sometimes, drivers mistakenly opened the doors on the left side of the tram at centre platforms. The centre platforms had been introduced to assist with disability access.
Obviously, when drivers opened tram doors on the left side of the tram when there was a centre platform, there was a risk that members of the public could step off the tram into oncoming traffic and be killed or seriously injured.
The respondent found an engineering solution to ensure that the doors on the correct side of the tram were always opened, but it took time to implement.
In the meantime, the respondent required workers to implement a temporary solution that required a change in work practices without following the process required by the enterprise agreement in the event of a dispute. One aspect of the temporary solution required certain workers to “dob” on other workers. When faced with resistance by the union, the respondent rescinded that aspect of the temporary solution, thus demonstrating that it had never actually been necessary.
c. the nature and extent of any loss or damage sustained
The contravening conduct did not cause any financial loss or damage. However, the temporary solution to the safety issue imposed by the respondent could have caused employees stress and anxiety, as described in the liability judgment.
d. whether there had been similar previous conduct
The applicant conceded that the respondent had not engaged in similar contravening conduct on previous occasions. Indeed, the applicant did not allege that the respondent had breached any industrial laws on any other occasion.
e. whether the breaches arose out of the one course of conduct
As discussed, there was only one breach in this case.
f. the size of the business enterprise involved
The applicant submitted that the respondent is a large and well-resourced organisation which would have the capacity to readily pay the maximum penalty that could be imposed in this case. The respondent did not dispute that. Consequently, I accept the applicant’s submissions on this issue.
g. whether or not the breaches were deliberate
The applicant argued that the respondent’s contravening conduct was deliberate and intentional and continued notwithstanding that the respondent had been alerted to the contravention.
The respondent argued that the contravening conduct was only deliberate in the sense that the physical actions comprising the contravening conduct were deliberate. However, the respondent maintained that the relevant manager, Mr Greer, did not believe at the time of the contravention that the respondent was contravening any industrial laws.
Having read Mr Greer’s affidavit, and having seen him give oral evidence, I am in no doubt that he genuinely believed at the time of the contravention that the respondent was not contravening any industrial laws and that it was acting in accordance with the enterprise agreement. Mr Greer was mistaken about that, as he acknowledged in the witness box.
h. whether senior management was involved in the breach
The applicant submitted that the critical decision makers in relation to the contravening conduct were senior managers of the respondent. The respondent did not dispute that. Consequently, I accept the applicant’s submissions on this issue.
contrition, corrective action and co-operation with the authorities
The authorities, in the sense of the Fair Work Ombudsman, were not involved in this case. An application to the Fair Work Commission was resolved by consent. However, the union then brought the matter before the court. The respondent did not admit the contravention, and it was necessary to have a trial. However, according to Mr Greer, the respondent now accepts that it did contravene s.50 of the Act.
The applicant argued that the respondent had shown no contrition or remorse, and had in fact argued in this court that the contravention was de minimus, and that the complaint should be dismissed.
The respondent, in its written submissions, said that the respondent was contrite and remorseful that it had made a decision that turned out to be wrong.
However, the fact is that the respondent filed an affidavit specifically for the purposes of the penalty hearing but it did not say anything to the effect that the respondent was contrite or remorseful. The assertions of counsel in this regard ring hollow. In the absence of any evidence of contrition or remorse, I do not accept that the respondent is contrite or remorseful.
The applicant submitted that the absence of contrition or remorse takes this matter to the higher end of the mid range of possible penalties. The respondent pointed out, correctly, that lack of contrition or remorse is not an aggravating factor. Rather, contrition or remorse are deserving of a discount.
In relation to corrective action, the applicant submitted that there was no evidence that the respondent had taken any steps to ensure that the respondent did not engage again in conduct of the type that occurred in this case.
The respondent submitted that it would be unreasonable to require the respondent to promise not to misunderstand the law again.
However, like the de minimis submission, that submission belies a certain arrogance on the respondent’s part. There are steps that the respondent could have taken to ensure that the type of conduct that occurred in this case did not happen again. Mr Greer was asked about one such step, when he was asked whether any directives from the upper echelons of management had been emailed to people at his level regarding the liability judgment and what it meant in practical terms. Mr Greer was unable to recall any such information being disseminated.
In the absence of any evidence that any corrective action has been taken, I am unable to find that there has been any.
j. the need to ensure compliance with minimum standards
This case does not concern minimum standards, in the sense of award conditions. However, obviously, it is a minimum standard that parties comply with their enterprise agreements.
k. the need for specific and general deterrence
The applicant argued that the respondent’s lack of remorse and contrition demonstrated the need for specific deterrence in this case. However, in my view, the respondent’s previously impeccable record in industrial matters, and the fact that it made a genuine mistake about the meaning of certain provisions of the enterprise agreement, indicate that the respondent is most unlikely to reoffend. As such, specific deterrence need not be a weighty consideration in this matter.
The applicant also argued that general deterrence was a significant factor in this case, because employers should be reminded that enterprise agreements must be complied with and breaches of them are serious matters. I accept that submission.
Other issues
I do not consider that there are any other relevant issues in this case.
The appropriate penalty
Weighing together all of the circumstances of this case, I consider that an appropriate response to the respondent’s contravening conduct is a penalty of $15,000. It is appropriate that the penalty be paid to the applicant.
There will be orders accordingly.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Riley
Date: 19 December 2018
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