Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union v Thornton Engineering Australia Pty Ltd
[2009] FCA 1584
FEDERAL COURT OF AUSTRALIA
Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union v Thornton Engineering Australia Pty Ltd [2009] FCA 1584
Workplace Relations Act 1996 (Cth) ss 298K(1)(a), 298L(1)(a), 298U(a). 298U(c)
Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329
Construction, Forestry, Mining and Energy Union v Coal & Allied Operations Pty Ltd [1999] FCA 1714
Construction, Forestry, Mining and Energy Union v Hadgkiss (2009) 174 FCR 237
Kelly v Fitzpatrick [2007] FCA 1080
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION, ANDREW PETER COON, JASON GRAEME KEMMIS and SHAYNE RODNEY TAYLOR v THORNTON ENGINEERING AUSTRALIA PTY LTD
VID 6 of 2008
NORTH J
18 DECEMBER 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 6 of 2008
BETWEEN: AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
First ApplicantANDREW PETER COON
Second ApplicantJASON GRAEME KEMMIS
Third ApplicantSHAYNE RODNEY TAYLOR
Fourth ApplicantAND: THORNTON ENGINEERING AUSTRALIA PTY LTD
Respondent
JUDGE:
NORTH J
DATE OF ORDER:
18 DECEMBER 2009
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Pursuant to s 298U(a) of the Workplace Relations Act 1996 (Cth) (the Act), the respondent pay a penalty of $20,000 for contraventions of s 298K(1)(a) of the Act arising from the termination of the second applicant for reasons including the reason stated in s 298L(1)(a), namely, that the second applicant was a member of the first applicant, and the reason stated in s 298L(1)(l), namely that the first applicant was seeking better industrial conditions and the second applicant was dissatisfied with his conditions.
2.Pursuant to s 298U(a) of the Act, the respondent pay a penalty of $20,000 for contraventions of s 298K(1)(a) of the Act arising from the termination of the third applicant for reasons including the reason stated in s 298L(1)(a), namely, that the third applicant was a member of the first applicant, and the reason stated in s 298L(1)(l), namely that the first applicant was seeking better industrial conditions and the third applicant was dissatisfied with his conditions.
3.Pursuant to s 298U(a) of the Act, the respondent pay a penalty of $20,000 for contraventions of s 298K(1)(a) of the Act arising from the termination of the fourth respondent for reasons including the reason stated in s 298L(1)(l), namely that the first applicant was seeking better industrial conditions and the fourth applicant was dissatisfied with his conditions.
4.Pursuant to s 356 of the Act the total penalty of $60,000 referred to in paragraphs 1, 2 and 3 be paid to the first applicant.
5.Pursuant to s 298U(c) of the Act the respondent pay to the second applicant compensation of $3,700 plus interest of $888, being a total of $4,588.
6.Pursuant to s 298U(c) of the Act the respondent pay to the third applicant compensation of $3,937 plus interest of $936, being a total of $4,873.
7.Pursuant to s 298U(c) of the Act the respondent pay to the fourth respondent compensation of $2,300 plus interest of $552, being a total of $2,852.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 6 of 2008
BETWEEN: AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
First ApplicantANDREW PETER COON
Second ApplicantJASON GRAEME KEMMIS
Third ApplicantSHAYNE RODNEY TAYLOR
Fourth ApplicantAND: THORNTON ENGINEERING AUSTRALIA PTY LTD
Respondent
JUDGE:
NORTH J
DATE:
18 DECEMBER 2009
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
BACKGROUND
On 6 October 2008 the respondent was found to have contravened s 298K(1)(a) of the Workplace Relations Act1996 (Cth) (the Act) by dismissing the second applicant, Andrew Peter Coon, and the third applicant, Jason Graeme Kemmis, for reasons including the reasons stated in s 298L(1)(a), namely that they were both members of the first applicant, the Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union (the Union).
The respondent was also found to have contravened s 298K(1)(a) of the Act by dismissing the second applicant, Andrew Peter Coon, the third applicant, Jason Graeme Kemmis, and the fourth applicant, Shayne Rodney Taylor, for reasons including the reasons stated in s 298L(1)(l), namely that the first applicant was seeking better industrial conditions and the applicant employees were dissatisfied with their conditions.
Following the finding of liability, the issue now arises as to the appropriate orders to be made. The orders available to the Court are set out in s 298U of the Act. Under subsection (a) a penalty may be imposed upon a body corporate of up to 300 penalty points, or $33,000 for conduct found to have contravened Part IV of the Act. Subsection 298U(c) permits the Court to require a person to pay compensation of an amount as the Court thinks appropriate.
On 10 November 2008 a hearing was convened to consider the question of these orders. On that day the Court raised two concerns arising from the conduct of the parties at trial. In the course of proceedings it became evident that the allegations of contravention directed at the respondent arose from a long-standing acrimonious relationship between Mr Thornton, the sole director of the respondent, and the Union, particularly the organiser responsible for that workplace. Mr Thornton gave evidence in the course of the trial that he had been bullied and oppressed by the Union since the opening of the Geelong plant in around 2000 or 2001.
His evidence about these events was graphic, including allegations that he and his family had been threatened in a violent manner. It appeared to the Court that if those matters had been substantiated, they might have pointed to a possible cause for the contraventions. Had that been so, the conduct of the Union might have been a matter which the respondent could rely upon by way of mitigation in the penalty phase of the proceeding.
The second concern related to the limited utility in simply imposing a monetary penalty. It seemed of greater utility to encourage the parties to try and mend the relationship so that the root causes of the contraventions might be addressed, rather than simply addressing the symptoms which are reflected by the conduct constituting the contraventions. This consideration caused the Court to suggest to the parties that they might consent to an adjournment of the penalty phase of the case for 12 months, during which time the respondent might put in place a program to ensure compliance with the requirements of the Act. Following this suggestion, the parties made some effort to pursue the idea. They also attended a mediation conducted by a Registrar of the Court. Nevertheless, the process ultimately yielded no success.
There was doubt whether the Court had power under s 298U to make orders compelling compliance with such a program: Construction, Forestry, Mining and Energy Union v Hadgkiss (2009) 174 FCR 237. Such a power is available under the Trade Practices Act1974 (Cth) (the TPA). For example, s 86C allows the Court to make a Probation Order, under which the Court may impose a program designed to ensure awareness of the responsibilities and obligations of employees in relation to contravening conduct. The current form of the industrial legislation, namely s 545(1) of the Fair Work Act2009 (Cth), which replaces s 298U, gives the Court power to make any orders the Court considers appropriate following a contravention of the legislation. This provision would have made it possible for the Court to impose a compliance order in a similar form to that envisaged by the provisions of the TPA. However, as it was not open to the Court at the time to make such an order, the matter did not proceed further.
The proposals offered by both parties to attempt to deal with the underlying breakdown in relations did not reflect a true engagement with the notion that some program was necessary to ensure compliance with industrial laws in the respondent’s workplace. Although the positions of the parties concerning the proposal were not stated without prejudice, they were part of a phase of the proceedings which was designed to resolve, in a more sustainable manner, the issues between them. The proposals advanced by the parties did not evidence a willingness to voluntarily repair the relationship. In these circumstances, it does not seem reasonable to take into account the positions of the parties during this phase in the determinations of appropriate penalties. Insofar as the respondent might seek to rely on its position taken in seeking to engage with the Union, its proposal was so desultory that it would not have assisted in any plea in mitigation.
In the result, the Court is left with the fairly torrid task of simply determining whether a monetary penalty should be imposed, and if so, in what amount, and whether compensation should be paid, and if so, in what amount. Such a course seems to fail to properly address the underlying dysfunction in the relationship. Try as the Court might, no other way forward has been available. Consequently, it falls to the Court to assess the arguments placed by the parties on the question of penalties and/or compensation.
SUBMISSIONS OF THE PARTIES
The applicants submitted that an appropriate penalty in this case would lie somewhere between the mid and upper range of the maximum. They pointed to a number of factors in support of their submission, including that the contraventions were committed in deliberate disregard of the provisions of the Act, and that there were unfortunate consequences on the applicant employees. Mr Coon had been injured and had only recently returned to work in a different capacity. Furthermore, all three employee applicants were dismissed very close to Christmas, with the attendant emotional stress and difficulty in finding reemployment which that involved.
The applicants pointed to the size of the respondent and observed that it was a significant employer in the Geelong region. The applicants argued that, against this background, it is necessary in imposing a penalty to send a message that the provisions in question are important and that employers must comply with them.
The applicants also drew attention to the manner in which the respondent had conducted the proceedings. They referred to the findings made in the determination of liability, and to the false claims made by Mr Thornton that Mr Coon’s work was of poor quality, and that both Mr Kemmis and Mr Coon had made threats to other employees. Those allegations painted the applicant employees in a particularly bad light. The Court found that the claims were unsubstantiated and the applicants argued that this was a matter that should be taken into account in assessing penalty.
The applicants argued that there was also a need for specific deterrence in this case, and that it was noteworthy that Mr Thornton had demonstrated no genuine contrition.
In light of these considerations, the applicants submitted that the proper level of penalty was $25,000 in relation to each employee, a total of $75,000. The applicants contended that the penalty should be paid to the Union, and that the applicants should be awarded compensation in amounts calculated by reference to the time that each was out of work following the dismissal. In relation to Mr Coon, that figure was $3700, Mr Kemmis, $3937, Mr Taylor, $2300, in each instance taking account of the payment received on termination. The applicants also submitted that the compensation amount should include interest.
By contrast, the respondent submitted that the contraventions were not at the higher end of culpability, and should not therefore attract a penalty near to the maximum. It argued that the three employees who were dismissed were on a trial period, and they were simply not continued at the end of that period.
The respondent contended that there was one contravention in relation to all of the employees, and that the starting point should be the maximum single penalty of $33,000, rather than $33,000 for each employee. This submission seemed to flow from an interpretation of s 298U(a), which does not seem to be sustained by the terms of the section. The words permit the designated maximum to apply to conduct which contravened a provision. In this case there were five contraventions of the legislation. It would therefore have been theoretically permissible for the Court to view the matter as engaging a penalty of up to five times $33,000.
The respondent then argued that the conduct was not taken in defiance of the Act. It was submitted that there were reasons for the dismissals which were given by Mr Thornton, and that they were legitimate business reasons. It was submitted that the respondent has no prior history of contraventions of the Act, and that the loss to the employees was small. It was said that the question of general deterrence was a neutral factor. It is unclear what this submission was intended to mean.
On the question of specific deterrence, the respondent contended that the proceeding had been an eye opener to Mr Thornton, that it had demonstrated to him the complexity of the industrial laws. He argued that the proceedings had brought home to him the significant costs involved in responding to such a case. The respondent then indicated that it had incurred significant legal costs, which as at 30 March 2009 amounted to approximately $35,000.
The respondent argued that to impose a significant penalty would be to inflame the relationship, and that such a course should be avoided.
The respondent pointed to difficult economic circumstances and said that a large penalty may well affect the ability of the respondent to continue operations. It was submitted that the Court should have regard to the totality principle and that applying such principle would lead to something around an amount not exceeding a third of the maximum of $33,000. In any event, the amount should be significantly less than half of $33,000, between $11,000 and $15,000. The respondent argued that it should be payable to the Consolidated Revenue Fund.
CONSIDERATION
The considerations which are ordinarily taken into account in these cases have been referred to in a number of cases to which each of the parties referred. There are several relevant cases, including Construction, Forestry, Mining and Energy Union v Coal & Allied Operations Pty Ltd [1999] FCA 1714, Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329 and Kelly v Fitzpatrick [2007] FCA 1080 (Kelly). Whilst these cases provide useful guidance in the process of determining appropriate penalties, in the end it is a question of judgment in each case as to what are the particular determining factors in the current case.
In this case, the major factor in mitigation is the clean record of the respondent. It has not been involved in contraventions of the Act before. That factor warrants a significant discount from the maximum penalty. There are, however, a number of other factors which would militate against any further mitigation.
The contraventions were, as the applicant contended, deliberate. They caused injury to three employees. The incidents were disconnected in time, so that it is not possible to say that they constituted one event. One dismissal occurred on 12 December 2005 and two on 21 December 2005. The contraventions were directed at three individuals, and it is therefore proper to view them as three separate events.
On the other hand, the contraventions in relation to Mr Coon and Mr Kemmis, which include both the reason that they were members of the Union and that the Union was seeking better conditions and they were dissatisfied with their conditions, are contraventions which have a factual overlap. It would be wrong to visit upon the respondent two independent penalties in relation to each of those applicants. It is therefore proper to consider the matter as if there were three separate occasions for liability. In practical terms, that means that the Court should not impose a penalty exceeding three times the maximum, or $99,000.
An important consideration is the need for general deterrence. The respondent is a large employer, it employs at present 100 people or thereabouts. It is an employer in a regional city, namely Geelong. It is likely that the industrial conduct of the respondent is particularly influential given both of those circumstances.
Also of significance is the issue of specific deterrence. The primary question in this regard is whether Mr Thornton, on behalf of the respondent, has appreciated and expressed the fact of and importance of the findings of the Court that the respondent has contravened the Act. It is in this aspect that the most distinguishing feature of the case resides. In an effort to address the issues set out in the cases, particularly Kelly, Mr Thornton swore an affidavit on 22 October 2008 in which he addressed the matters said in that case to be relevant to the question of penalty. In that affidavit he said:
The dismissals of the applicant employees occurred against a background of problems with the afternoon (night shift) on the beam line and with quality control. Neither I, nor anyone else, on the part of the respondent simply targeted the applicant employees for termination because they were Union members or claiming better industrial conditions. The respondent did not, for example, ascertain which of its employees were Union members and dismiss them all.
And further that:
There were reasons for these dismissals which I say were rational reasons not related to Union membership or industrial claims. I accept of course that the Court has found that the respondent has not succeeded in proving on the balance of probabilities that the reasons for the terminations did not include the prescribed reasons. But I say that the terminations were not blatant anti-Union terminations devoid of other rational reasons.
This view of the case directly conflicts with the findings made by the Court. The Court found that the positive case sought to be established by the respondent of the reasons for the dismissals was not made out. It is a strong indicator of lack of understanding of the fact of contravention, or acceptance of it, that this affidavit was sworn in such a manner. The terms of the affidavit confirm the view which the Court formed of Mr Thornton from the evidence which he gave. That view is of a dogmatic, inflexible person, unprepared to engage in argument with any who disagree and who simply rejects the views opposed to his own. The respondent has not exhibited any genuine contrition for the contraventions. Mr Thornton is simply sorry that the whole episode has been costly and inconvenient.
The case for specific deterrence in these circumstances is very strong. It seems that the only way in which the message can be delivered to the respondent that industrial laws need to be obeyed is by the imposition of a significant penalty.
As earlier indicated, it was a concern of the Court to ensure that, if the contravening conduct arose by reason of some sort of provocation by the Union over many years, that that matter would be taken into account in mitigation of penalty. Were those facts established, it is probable that such conduct would be reflected in a reduction of the penalty, although I accept that that proposition may not be free from controversy.
The onus of establishing that the Union has so conducted itself as to provoke the respondent into conduct which amounted to a contravention of the Act, is borne by the respondent. It has failed to discharge that onus. The Union filed an affidavit of Gary Robb, sworn on 13 March 2009 which controverts much of the evidence given by Mr Thornton about the events relating to the start up of the business in around 2000 or 2001. It is not possible from the contest on affidavits and the limited viva voce evidence given by Mr Thornton at the hearing to find that the Union has behaved in a manner which is so outside the bounds of reasonableness that it would explain the unlawful dismissal of the applicant employees. Rather, the picture presented on the evidence is of two parties pursuing their interests with full vigour, with a deep antagonism towards each other, each able to give as much as they get. There is no basis from the conduct of the Union for any reduction in the penalty which would otherwise be appropriate in this case.
THE APPROPRIATE PENALTY
In fixing the appropriate penalty it is necessary to ensure not only that the penalty for each of the contraventions is just and reasonable, but that the total amount imposed is also just and reasonable: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329. Taking into account the factors referred to above, the appropriate penalty is $20,000 in relation to each of the three applicant employees, a total of $60,000.
COMPENSATION AND INTEREST
The applicants have made out the claim for compensation and interest as follows:
·To the second applicant, Mr Coon, an amount of $3,700 representing lost wages, plus interest of $888, being a total of $4,588.
·To the third applicant, Mr Kemmis, an amount of $3,937 representing lost wages, plus $936 representing interest, being a total of $4,873.
·To the fourth applicant, Mr Taylor, an amount of $2,300, plus interest of $552, being a total of $2,852.
TO WHOM THE PENALTIES ARE PAYABLE
The Union has pursued this difficult and hard fought case. It has done so because it is one of the bodies entitled to bring such a proceeding under the Act. In those circumstances, it is appropriate that the penalty be paid to the Union: Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847.
A COSTS ISSUE
The respondents seek costs of the directions hearing conducted on 8 December 2008. It relied on s 824(2) of the Act, as it then was, which allows the Court to make orders regarding costs if it is satisfied that a party has, by unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding.
The basis for this application was that the directions hearing was necessary to consider a proposal made by the Union for a compliance program and other orders as an alternative to the imposition of a penalty. The proposal which was made was unreasonable. The reasons for that conclusion were explained at the time. In particular, the proposal required that the respondent publicly advertise its wrongdoing in the local papers. This seemed to be no more than an attempt to oppress and embarrass than to achieve any useful educational or sustainable outcome.
Were this the full extent of the story, it might be reasonable to exercise the power under s 824(2). However it is not the whole story.
At the same time, the respondent made proposals in support of the notion of adjourning the penalty hearing which were almost equally as unacceptable. In truth, all the parties failed to engage with the idea that there was any workable way to resolve the question of what orders the Court should make other than by a contest. No doubt the applicants incurred costs equal to the costs incurred by the respondent on 8 December 2008 as a result of similarly unreasonable actions. Justice would not be served to make an order in favour of the respondent in relation to the costs of the directions hearing held on 8 December 2008.
I certify that the preceding thirty eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.
Associate:
Dated: 23 December 2009
Counsel for the First, Second, Third & Fourth Applicants: Ms Doust Solicitor for the First, Second, Third & Fourth Applicants: Maurice Blackburn Lawyers Counsel for the Respondent: Mr Rinaldi Solicitor for the Respondent: Mitchell Burke & Co.
Date of Hearing: 10 November 2009 Date of Judgment: 18 December 2009
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