Boyd v Glenvill Pty Ltd (No 2)
[2021] FedCFamC2G 164
•18 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)Boyd v Glenvill Pty Ltd (No 2) [2021] FedCFamC2G 164
File number(s): MLG 1676 of 2019 Judgment of: JUDGE A KELLY Date of judgment: 18 October 2021 Catchwords: INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) – Penalties – order made under s 545(2)(b) for payment of compensation – order made for payment of, commissions – order made order made under s 547 for payment of pre-judgment interest – whether appropriate for penalties to be imposed for the contraventions – applicable principles – penalty order made under s 546(1) to be paid by respondent.
INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) – Penalties – to whom penalty should be paid – where s 546(3) provides the court may order that penalty, or part of the penalty, be paid to the Commonwealth, a particular organisation or a particular person – where question posed by s 546(3) as to whom penalty should be paid – proper construction of s 546 – where ordinarily ‘usual’ order is for penalty to be paid to the applicant – use of judicial guidelines in exercise of power to make order under s 546(3) – rationale for penalty being paid to applicant – payment serves to protect against stultification of enforcement proceedings – applicable principles – where fundamental role of court is to quell controversies – case management – whether rigid adherence to a settled practice of making usual order is inimical to role of Ch III court – criteria for directing to whom penalty is to be paid – whether court foreclosed from having regard to disentitling conduct – where claims pressed for determination vastly exceed relief granted – orders made splitting penalty for payment to applicant and the Commonwealth.
Legislation: Acts Interpretation Act 1901 (Cth), s 15AA
Conciliation and Arbitration Act 1904 (Cth), ss 59, 60
Fair Work Act 2009 (Cth), ss 3, 4, 60, 323, 336, 340, 356, 539, 540, 545, 546, 547, 557A, 570
Federal Circuit and Family Court of Australia Act 2021 (Cth), ss 43, 190
Industrial Relations Act 1988 (Cth), s 178
Workplace Relations Act 1996 (Cth), ss 178, 719, 841
Workplace Relations and Other Legislation Amendment Act 1996 (Cth)
Explanatory Memorandum, Fair Work Bill 2008 (Cth), cl 546Cases cited: A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466
Alcan (NT) Alumina Pty td v Commissioner of Territory Revenue (2009) 239 CLR 27
Ainsworth v Albrecht (2016) 261 CLR 167
Arios Diagnostics, Inc v Sequenom, Inc (2021) 391 ALR 473
Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062
Boyd v Glenvill Pty Ltd [2021] FCCA 265
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Civil Air Operations Officers Association of Australia v Airservices Australia (No 2) [2021] FCA 993
Comcare v Australian Postal Corporation [2011] FCA 530
Comcare v PVYW (2013) 250 CLR 246
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
CPSU, The Community and Public Sector Union v Telstra CorporationLtd (2001) 108 IR 228
CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCAFC 171
Dafallah v Fair Work Commission (2014) 225 FCR 559
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 126
Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128
Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148
Julius v Lord Bishop of Oxford (1880) 5 App Cas 214
Kelly v Fitzpatrick (2007) 166 IR 14
Leach v The Queen (2007) 230 CLR 1
Markarian v The Queen (2005) 228 CLR 357
Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 94 ALJR 818
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118
Norbis v Norbis (1986) 161 CLR 513
Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75
Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
Sayed v Construction, Forestry, Mining and Energy Union (2015) 327 ALR 460
Sayed v Construction Forestry, Mining and Energy Union (2016) 239 FCR 336
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
The Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Company Inc (1994) 181 CLR 404
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249
Trade Practices Commission v CSR Ltd (1991) 13 ATPR ¶41–076
United Voice v Lloyds Services Act Pty Ltd [2017] FCA 1007
Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 151 ACSR 407
Ward v Williams (1955) 92 CLR 496Perry Herzfeld and Thomas Prince, Interpretation (Thomas Reuters, 2nd ed, 2020)
Dennis Pearce and Robert Geddes, Statutory Interpretation in Australia (LexisNexis, 9th ed, 2019)Division: Division 2 General Federal Law Number of paragraphs: 164 Date of hearing: 26 April 2021 Place: Melbourne Solicitor for the Applicant: Grice Legal Counsel for the Applicant: Mr J. Tracey Solicitor for the Respondent: Mark Caldwell Counsel for the Respondent: Mr J. D’Abaco ORDERS
MLG 1676 of 2019 IN THE FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
BETWEEN: ROSS BOYD
Applicant
AND: GLENVILL PTY LTD (ACN 150 874 356)
Respondent
ORDER MADE BY:
JUDGE A KELLY
DATE OF ORDER:
18 OCTOBER 2021
THE COURT ORDERS THAT:
1.Pursuant to ss 323, 340 and 546(1) of the Fair Work Act 2009 (Cth) (Act), the respondent, Glenvill Pty Ltd (ACN 150 874 356), pay a penalty in the sum of $25,000.00.
2.Pursuant to s 546(3) of the Act, the said penalty be paid as to:
(a)$12,500.00 to the applicant, and;
(b)$12,500.00 to the Commonwealth of Australia.
3.The penalty payable pursuant to paragraphs (1)-(2) of this Order be paid within 30 days.
4.By consent, the respondent pay the applicant the sum of $84,500 upon the claims for commission as made in the amended application together with the sum of $10,790.31 by way of pre-judgment interest.
5.Pursuant to s 570(2) of the Act, the respondent forthwith pay the applicant the sum of $3,500 for certain of the costs incurred in relation to the proceeding.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE A KELLY
Introduction
These reasons for judgment explain the orders made under the Fair Work Act 2009 (Cth) (Act) upon an application for pecuniary penalties. They should be read with and incorporate the findings made and matters addressed in Boyd v Glenvill Pty Ltd [2021] FCCA 265 (first reasons).
In the first reasons, I concluded the applicant had made out certain of his claims, including that the respondent had contravened s 340 of the Act in that it took adverse action against the applicant because he had a workplace right by reason that he was able to make a complaint or enquiry to the respondent in relation to the sales commissions accrued in his employment. Further, I found it had contravened s 323 of the Act in withholding from the applicant $12,846 on 7 March 2019 when terminating his employment, being an amount payable to the applicant in full in relation to the performance of his work. Orders were made for the payment of compensation of $110,000 together with payment on claims for commission and pre-judgment interest on those sums. Claims for reinstatement and ancillary relief were dismissed.
Two substantive questions are raised for determination by the application for penalties. First is the question posed by s 546(1) whether it is appropriate that penalties be imposed for the contraventions that have been established. Secondly, the question posed by s 546(3) concerns to whom any penalties should be paid. The issues posed by those questions are distinct but overlapping. For the reasons which follow, I conclude that pecuniary penalties totalling $25,000 should be imposed on the respondent. I have determined that one half of the penalties should be paid to the applicant and the remaining half to the Commonwealth.
Background
It is unnecessary to rehearse much of the background that is already set out in the first reasons. The applicant was employed as a design manager by the respondent from March 1998 until the respondent terminated his employment by letter dated 7 March 2019 at a time when he was on sick leave. At the time of trial, the applicant was 65 years of age. Over an extended period of several months preceding his dismissal, the applicant had been engaged in discussions seeking to resolve claims for commission which he had accrued over some years. The respondent’s CEO, CFO and General Manager[s] were involved in those discussions with the applicant.
Over the period of the applicant’s employment, the respondent’s business had grown under the management of its CEO who had taken a family business out of administration and rebuilt it. Additionally, a number of greenfield and other commercial property development businesses were established during that time. In contrast with the growth and success of those other businesses, the performance of the respondent’s business was lacklustre. While the CEO had been challenged over many years in lifting the performance of the respondent’s business, in recent years, substantial other demands on his time effectively precluded him from focussing on the respondent’s activities. Indeed, such was the scale and ambition of other projects being undertaken, the respondent’s Board of Directors had, in effect, instructed the CEO (who was also its managing director), that if he wished to pursue his ambitions of large-scale property development then he could do so only by dedicating himself exclusively to those endeavours.
In due course, the CEO appointed a new General Manager who evaluated the performance of all staff in the respondent’s business. The new General Manager reported upon his conclusions, first to the CEO and then to the Board of Directors who endorsed his recommendations which included that the applicant’s employment should be terminated. The applicant’s employment was terminated without notice or any reasons being assigned. The respondent denied any conduct relied upon by the applicant constituted adverse action. Over a long period the respondent resisted all attempts by the applicant to engage in any meaningful way upon the resolution of his claims to commission. During this period, the applicant made a final attempt to resolve the impasse by engaging a solicitor to liaise with the respondent in relation to the proper construction of the terms of the employment contract relating to commission. When the new General Manager discovered this letter had been written he was in a state of disbelief that an employee who had engaged a lawyer upon such a matter was still employed.
By his amended application, the applicant sought reinstatement, compensation, recovery of outstanding monies, alternatively damages, interest, pecuniary penalties, declaratory and other ancillary relief. By its defence, the respondent outlined in detail the basis on which it had not contravened the Act and opposed the relief being sought. By the time of trial, the applicant had modified some of his claims and withdrawn one of them. The proceeding was actively contested. Each party called a number of witnesses in support of the claim or defence.
I have found the respondent liable for unpaid commissions albeit that the quantum of those claims was substantially reduced between the date upon which the proceeding was instituted and closing address. It was also reduced by reason that the proper construction of the relevant terms of the contract of employment upon which depended the entitlement to commission differed from that asserted by either party. Further, as noted, the respondent also contravened the Act by withholding other accrued entitlements from the applicant, and instead asserted, at the date of dismissal, he was liable for substantial sums. While that assertion was not pressed, at the same time, the respondent did not pay those accrued entitlements until the eve of trial.
Upon the delivery of judgment on liability, orders were made for payment of compensation and accrued commissions together with pre-judgment interest. While the principal sums were paid, the applicant also complained that sums for which judgment had been given had not been paid until the eve of submissions being made upon the application for penalties. Likewise, delays were encountered in the computation of the outstanding commissions. The applicant submitted that in all the circumstances, substantial penalties should be ordered to be paid to him. The respondent submitted penalties at the lower end of the range were appropriate.
Applicable principles – imposition of a penalty
The applicable principles were not in dispute and, subject to what follows, largely restate the principles as articulated by the parties’ submissions. Chapter 4 of the Act, Compliance and Enforcement, is arranged in two parts comprising ss 537 – 572 of the Act. Part 4-1, Civil Remedies, comprises ss 537 – 559. The Act entitles a person to apply for an order of a kind provided by Div 2 of Pt 4-1 of Ch 4. However he or she may only do so if they are a person affected by a contravention of a civil remedy provision: Act, s 540(1).
Within Pt 4-1, Div 2 concerns Orders and by Subdiv A provides for Applications for orders. Subdiv B concerns Orders and comprises ss 545-547. Section 545 concerns Orders that can be made by particular courts and includes injunctions and orders for compensation and reinstatement. Section 546 provides for the making of Pecuniary penalty orders. Section 547 provides for Interest up to judgment.
The power conferred by s 546 is to make an order that a person pay a pecuniary penalty. The power so conferred is not engaged unless the court is satisfied a person has contravened a civil remedy provision. Upon being so satisfied, where application has been made, power is conferred on this court to order a person to pay a pecuniary penalty that the court considers ‘appropriate’: Act, s 546(1). The conferral of power to quantify the penalty is also framed in terms which require the court to be satisfied that it is ‘appropriate’ to do so. On its plain meaning and in its adjectival use, ‘appropriate’ denotes that which is specially suitable or proper. As employed in each of ss 545 and 546, the term ‘appropriate’ constrains the exercise of power in the determination whether to award compensation, impose a penalty and in quantifying those respective amounts: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408. Upon being satisfied it is appropriate a contravener pay a penalty, the scope of the liability for the debt created by the making of the order is to be such sum as the court considers ‘appropriate’ having regard to the particular type of civil remedy provision that was contravened and the unique facts and circumstances of the particular case.
In the case of a body corporate, in the determination of penalty, par 546(2)(b) places a ceiling on the scope of liability being not more than five times the maximum number of applicable penalty units. In the case of both ss 323 and 340, that maximum is 60 penalty units.
In the determination of appropriate relief, regard must be had to the facts and circumstances giving rise to the contravention and of the need to sustain public confidence in the legislative regime by which the relevant obligations are imposed: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, [91] (Buchanan J). The court is to adopt a process of instinctive synthesis which evaluates all factors that are considered relevant to the penalty, and make a value judgment as to an appropriate penalty in all the circumstances. In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148 at [36], Bromwich J identified the steps to be considered in the determination of penalty and quantification of the relief as requiring identification and consideration of:
a)the separate contraventions, with each breach of each statutory and award-based obligation being treated as a separate contravention;
b)whether each separate contravention should be dealt with independently or upon some degree of aggregation for those contraventions arising out of a course of conduct;
c)whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response, where necessary, to what each respondent did;
d)the appropriate penalty in respect of each final individual group of contraventions, taken in isolation;
e)the overall penalties arrived at, including by reference to those which may be proposed by the parties or each of them (in this proceeding, both being the same jointly agreed amount), and apply a principle of ‘totality’, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary.
In stating those propositions, his Honour essentially adopted the submissions advanced in that proceeding on behalf of the Fair Work Ombudsman. The approach, commended by Bromwich J has been followed on numerous occasions: see, e.g, Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60, [11] (Anderson J); Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062, [126] (Allsop CJ).
The subject contraventions have been identified above. The contraventions should be dealt with separately. No submissions were made to suggest that principles related to contraventions involving a course of conduct or common elements (i.e. grouping) were engaged. It was common ground the maximum penalty for each contravention was $63,000 resulting in a potential maximum of $126,000. The necessity for reflecting upon the maximum available penalty arises for a number of reasons. Identification of the applicable penalty: reflects the legislature’s view of the seriousness of the prescribed conduct; enables comparison of the case at hand with the worst possible case; allows for its use as a yardstick to be taken and balanced with all other relevant factors and thereby to locate the instant case at a point on the spectrum of the least to most serious of the particular type of contravention, and; serves to avoid a result of imposing a penalty that is oppressively high: Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, [106] (Dowsett, Greenwood and Wigney JJ); citing Markarian v The Queen (2005) 228 CLR 357, [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Mornington InnPty Ltd v Jordan (2008) 168 FCR 383, [88], [107] (Stone and Buchanan JJ); Civil Air Operations Officers Association of Australia v Airservices Australia (No 2) [2021] FCA 993, [58] (Murphy J).
The primary purpose of civil penalties is to promote the public interest in compliance and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravener and by others who are in a position to contravene legislation: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (DFWBII), [55] citing Trade Practices Commission v CSR Ltd (1991) 13 ATPR ¶41–076, [40]. Upon contravention, both specific and general deterrence are the principal (and perhaps only) object of civil penalties under the Act. In amplification of the primary purpose of deterrence, the High Court has underscored that the achievement of that purpose necessarily depends upon a penalty having the necessary ‘sting or burden’ to secure ‘the specific and general deterrent effects that are the raison d’être of its imposition’: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, [116] (Keane, Nettle and Gordon JJ). Relatedly, courts now regard more seriously the contravention of industrial laws than may previously have been the case: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union(No 2) (2010) 199 IR 373, [12]; Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 126, [38].
Beyond those important statements of principle, a non-exhaustive and non-rigid list of other factors have been repeatedly adopted and are recognised as being of potential relevance in providing assistance when setting a penalty which properly reflects an appropriate deterrent value. These factors were endorsed in Kelly v Fitzpatrick (2007) 166 IR 14 [14] by Tracey J:
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 sustained as a result of those breaches;
d) whether there has been similar previous conduct by the respondent;
e) whether the breaches were distinct or arose out of one course of conduct;
f) the size of the business and the enterprise involved;
g) whether or not the breaches were deliberate;
h)whether senior management was involved in the contraventions;
i)whether the party committing the contravention exhibited contrition, has taken or will be taking corrective action and/or cooperated with enforcement authorities;
j)the need to ensure compliance with minimum standards by provision of effective means of investigation and for specific deterrence.
As stated, these factors should not be employed in a restrictive manner and instead provide guidance as considerations which may be useful in exercising the statutory discretion when determining a penalty: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11], (Gyles J); Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151, [74] (Mansfield J). The discretion is to be exercised judicially upon those settled principles: Comcare v Australian Postal Corporation [2011] FCA 530, [62] (Kenny J); Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 151 ACSR 407, [124], [134], (Wigney, Beach and O’Bryan JJ).
The reason for caution against treating these factors as a rigid catalogue was explained in Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75, [99]. Allsop CJ, Besanko, White, Wigney and Bromwich JJ, stated that “the task of the Court is to fix a penalty that 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.” The Full Court endorsed the view that such “factors are not mandatory criteria and can lead to over-elaborate reasoning for a task that is a discretion at large as to what is appropriate to the object concerned”: citing A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466 at [6] (Gyles J). I address them in turn.
Conduct, loss & circumstances
As submitted on his behalf, the applicant, an employee of 20 years duration whose performance assessments over that period were generally highly positive in content, was terminated without notice and without any reasons being provided for dismissal. Monies due to him were withheld. The termination did not occur in person. Rather, the applicant received notice by email at a time when he was on sick leave – a fact objectively known to the respondent.
I have identified the loss sustained by the applicant and for which orders have now been made. I am quite prepared to infer the respondent and its senior management simply did not want to pay the applicant his accrued entitlements, commission or to give proper notice.
There was force in the submission that the manner of his dismissal reflected the most basic want of fairness in the broad sense – he had no inkling his dismissal was pending and was simply informed of the fact by letter from a recently engaged General Manager; this occurred despite the respondent’s avowed corporate culture where staff were regarded as ‘family’. Just as the CEO resorted to football analogies in giving his evidence, the very least an outgoing player might expect at the end of a long career would be to receive the bad news in person. When commission was being discussed in December 2018, the decision to dismiss had already been made. Rather than being discharged by the CEO (with and for whom the applicant had worked for over two decades), the task of communicating the dismissal was delegated to a newly appointed General Manager (who had barely spoken to the applicant at any length) who did so by email. The CEO’s reference to the respondent’s regard for staff as ‘family’, especially those of longstanding, was remarkable.
Those considerations are aggravating circumstances which go to penalty. Counsel for the respondent accepted the contraventions were serious in the circumstances in which they occurred, however, it was submitted the respondent bore no antipathy toward the applicant and at least as concerns the CEO, I will accept as much. It was further submitted, correctly, that the applicant’s work performance for the six months ended December 2018 was a reason which underpinned the new General Manager’s recommendation for the termination of his employment. This circumstance necessarily forecloses a finding that the sole reason for the applicant’s dismissal was his complaints and enquiries in relation to his claims for commission. Moreover, as the case evolved, it became plain that the applicant’s initial claims for commission far exceeded his lawful entitlement. Furthermore, in some respects the applicant’s construction of the contract was rejected. While the parties were in dispute in relation to such entitlements, to some extent, these aspects of the conduct militate against a conclusion the contraventions occurred in aggravated circumstances.
Similar previous conduct
There is no evidence the respondent has previously contravened workplace laws. Although the applicant submitted this was a neutral consideration, the respondent submitted it should be seen as a first-time offender. This circumstance does not provide the foundation for a submission that a respondent is entitled not to be penalised on the basis that it was a good corporate citizen or had an acceptable corporate culture of compliance: Volkswagon (2021) 151 ACSR 407, [142]. As the Full Court noted in that appeal, prior good character is generally not given significant weight where (as here), general deterrence is a significant factor. It does not always warrant a substantial discount, particularly where the contravention is serious and was engaged in over a long period: [143]-[144]. While those observations are of undoubted importance, especially as to deterrence, on the facts and circumstances of the present case, the contraventions, while admittedly serious, were not engaged in over a long period.
Course of conduct
The contraventions were separate and distinct and so each attract a penalty.
Respondent’s size & circumstances
The parties’ submissions recognise the respondent is a well-established medium sized business.
Specific and general deterrence assume primacy when evaluating the penalty which is appropriate to be imposed. While the size of a respondent’s enterprise and capacity to pay a penalty are factors which may be relevant upon the consideration of deterrence, they cannot distract from the need to “deter others from engaging in similar contravening conduct in the future”: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281, [9] (Merkel J); see also Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148 (NSH North), [61] (Bromwich J); Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60, [61] (Anderson J). In the case of very large corporations, specific deterrence is to be considered with reference to the size of its enterprise and profitability: cf Volkswagen (2021) 151 ACSR 407, [148], [154]-[155], [167]; Allianz Australia Insurance [2021] FCA 1062, [85].
Although the consideration may be relevant in some cases, it was not, however, submitted in the present case, that account should be taken of any profitability motive or receipt of profit arising from the conduct which constituted the contraventions of this Act. While it is not appropriate to treat the respondent as being a very large corporation in the sense discussed in some of the authorities (including in relation to penalties under other legislation), here, there is no warrant for increasing or decreasing the penalties on account of this factor.
Deliberateness
The respondent accepted each contravention had been deliberate in the sense of being inadvertent, but sought to downplay such conduct. As the first reasons made clear, I am in no doubt the CEO was the chief architect of the design to overhaul the respondent’s personnel and to do so after years of his own inattention and ongoing dissatisfaction with the performance of this division of his otherwise burgeoning enterprise. I do treat this as an aggravating factor in the determination of each penalty. Although the CEO’s evidence was that his CFO (who did not give evidence) usually ‘worked the numbers’ in a way favourable to his employer, the peremptory terms of the letter of dismissal were framed so as to assert a position that it was the applicant who was indebted to the respondent upon the termination of his employment. Viewed broadly, I am in no doubt there was a design to dismiss the applicant (and others).
Senior management
This issue has been addressed above. The respondent’s CEO made an affidavit which was read for the purposes of the penalty hearing and in which full responsibility was taken by him for the proven contraventions. The deponent advanced other evidence as to these matters which I have considered including that a sworn apology was proffered to the applicant for the hurt and distress he had suffered. It was also deposed that the respondent’s senior management had discussed the ramifications of the findings made in the first reasons and would do their utmost to avoid further contraventions of the Act.
The applicant was somewhat dismissive of the affidavit, describing it as having addressed issues at too high a level of generality and being, in effect, far “too little too late”. Without disregarding the deliberate nature of the contraventions, I accept the sincerity of the deponent’s affidavit and the candid acknowledgements which it contains.
That said, the involvement of senior management is a matter of real significance. Meaningful penalties are appropriate both in terms of specific and general deterrence to the respondent’s personnel in this case and those who occupy similar positions of responsibility elsewhere. Transgressions by senior management are less likely to attract leniency.
Contrition, corrective action & co-operation
As stated, the applicant was dismissive of any supposed contrition on the part of the respondent. I do not accept that submission. I am not prepared to find that the respondent’s CEO was not genuine in making his affidavit in which he expressed his apology and regret for the contraventions which have been proven. He was not cross-examined. Undoubtedly, there are those cases in which a respondent’s belated contrition might more accurately be viewed as little more than regret at having been caught. That was not entirely accurate in this case, if only because both parties enjoyed a measure of success in the ultimate outcome. Put another way, by his original claim the applicant pursued far broader relief, some of which was abandoned for the first time in opening and others of which were pursued albeit for a lesser quantum. Questions of contrition and co-operation should not be seen in a vacuum. Right to the point of closing submissions, the applicant pursued an alternative claim for compensation of many hundreds of thousands of dollars if reinstatement was not granted. While the two subjects may be quite unrelated, at another level proof of a contravention was essential to whether the applicant had any entitlement to compensation because of loss suffered as a result and whether the court considered it appropriate that the respondent paid a penalty. The pursuit of claims that were objectively inflated may have impeded resolution of the penalty proceeding.
Without distracting attention from contrition and conduct in relation to the contraventions, I am prepared to take account of the stance the respondent adopted in the proceeding before, during and after the trial, having regard to the manner in which the claims were formulated and pursued against it. I do not ignore that the respondent’s CEO attended throughout the entirety of the hearings, both on liability and in relation to penalty.
Other aspects of the respondent’s conduct warrant consideration, including the failure to pay the sums that were ordered on 23 February 2021. The applicant submitted that this conduct was merely the latest manifestation of the respondent’s disregard toward the applicant and, more particularly its disregard of orders made by this court. I do not overlook those matters.
I also accept the respondent’s senior personnel are intent on adopting steps to mitigate the risk of any further contraventions of the Act. While it is true that the respondent did pay the amount of some accrued entitlements, it only did so on the eve of trial. I accept that in some cases, the respondent contested liability where its decisions to do so were validated. In other respects, I regarded some of its defences as near untenable.
I agree that co-operation with enforcement authorities is not relevant in this case. Contrition and corrective action have been addressed above.
Compliance with minimum standards
The respondent properly acknowledged that compliance with minimum standards is an important consideration. Here, the imposition of meaningful penalties is necessary to send the appropriate message that there are serious consequences for failing to comply with the Act and to create an incentive for both the respondent and other employers to change their practices.
Deterrence: specific & general
The purpose of imposing a civil penalty (including under this Act) is primarily protective of the public interest in securing compliance with, and deterring contravention of, the law. The imposition of a civil penalty seeks to achieve deterrence by attempting to put a price on a contravention that is sufficiently high so as to deter repetition, both by the contravener specifically and by others more generally who might be tempted to engage in impugned conduct which would contravene the legislation: DFWBII (2015) 258 CLR 482, [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ); [110] (Keane J); Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249, [62] (Keane CJ, Finn and Gilmour JJ); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, [98] (Dowsett, Greenwood and Wigney JJ). For that reason, a civil penalty must “be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as [merely] an acceptable cost of doing business”: DFWBII (2015) 258 CLR 482, [110]; Singtel Optus (2012) 287 ALR 249, [62]-[63]; Allianz Australia Insurance Ltd [2021] FCA 1062, [85].
For civil penalties, notions of punishment and rehabilitation are no longer seen as being relevant: Trade Practices Commission v CSR Ltd (1991) 13 ATPR ¶41–076, [40]; NSH North (2017) 275 IR 148, [128]-[129]. Consequently considerations of specific and general deterrence are of central relevance to the imposition of a penalty under the Act: see, eg, Commonwealth v DFWBII, (2015) 258 CLR 482, [55], [110]; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543.
For reasons addressed below, I note the applicant’s reliance upon the oft cited statement in Trade Practices Commission v CSR Ltd (1991) 13 ATPR ¶41–076, [40]. There, French J recognised that in the determination of a penalty, there was no compensatory element in the proper process of such determination and that “the principal and I think probably only, object of imposing a penalty is to attempt to put a price on contraventions that is sufficiently high to deter repetition by the contravene and by others who might be tempted to contravene the Act.” Those principles have been endorsed repeatedly.
Concerning specific deterrence, the applicant submitted this focused upon the likelihood of the contravening party being involved in a similar breach in the future and, for that reason that “Much will depend on the attitude expressed by that party, as to things like remorse and steps taken to ensure no future breach will occur”: Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 (Plancor), [37] (Gray J); Volkswagen (2021) 151 ACSR 407, [153]. For that reason, the court should pay regard to both objective factors and the contravener’s subjective conduct: cf Volkswagen (2021) 151 ACSR 407, [150]-[152].
As to general deterrence, a penalty should deter others who may have a propensity to offend and should mark out the court’s disapproval of the contravening conduct, doing so in part as a warning to others. Relatedly, it is of particular importance that employers should be in no doubt about their obligation to comply with general protections that are embodied in statute and the proscriptive terms in which they are stated: Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 (CPSU), [9]; Ponzio (2007) 158 FCR 543, [93]; Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128, [50].
The applicant identified a number of reasons why the court should not be satisfied of the respondent’s avowed remorse. While I have reflected upon those submissions, however, I do accept the CEO’s evidence and do so in the broader context that in all the circumstances I recognise there were aspects of the claims which were inherently contestable and in the event, where some of the claims were successfully defended and one was not pressed. These matters are of some relevance as providing some context, in part by neutralising criticism for having defended the claims to judgment, but does not indicate a lack of remorse.
I regard deterrence, both specific and general, as being of fundamental importance.
Totality
It was common ground the court should pay regard to the totality of the penalties in its consideration of what sum it was appropriate to order the respondent to pay. Undertaking this instinctive synthesis is necessary as part of the process of considering that the proposed penalty is proportionate when all contraventions are viewed collectively. Stated in other terms, an overall evaluation is needed to assess the proportionality of the proposed penalty to the gravity of the contraventions in issue and to secure the need of sustaining public confidence in the regime pursuant to which adherence to statutory obligations are observed and enforced.
Counsel for the applicant submitted there was no warrant for reducing the aggregate penalties for the two contraventions upon the principle of totality. While attention was drawn to the financial and adverse effects upon the applicant’s mental health, each of those issues was addressed in the first reasons. The proper measure of compensation for the contraventions has been determined and orders made pursuant to par 545(2)(b) for the payment to the applicant in respect of those wrongs. The compensation to which the applicant is entitled has been paid. I have referred above to the role which compensation does not play in the determination of a penalty. Other aspects of this submission may be noted. First, by his amended application, the relief being sought was for contraventions of the Act and for claims arising under the applicant’s employment contract. Secondly, relief to which an applicant may be entitled under ss 545 and 546 respectively are distinct. That is, the applicant’s standing to bring a claim for contraventions of the Act including, pursuant to s 546(1) an order that a contravener pay a penalty, is a distinct cause of action from a claim for compensation or other relief under s 545. Thirdly, as the authorities below confirm, the imposition of a penalty is not any part of the applicant’s compensation. Fourthly, those considerations should not be misunderstood as diluting the important protective objects of the Act and the fundamental object which are to be served in imposing a penalty for a proven contravention.
For the respondent, it was submitted the applicant has been compensated pursuant to the orders made under par 545(2)(b). It was further submitted the penalties to be imposed should reflect the purposes of the Act and at the same time be proportionate to the gravity of the conduct and subject to the process of instinctive synthesis in accordance with the principle of totality. As to this, a number of matters were noted: while the respondent had not discharged the reverse onus in respect of the claim for adverse action, it had also been found the applicant would not have remained employed for more than nine months; the respondent and its senior management have not been spared the opprobrium from the findings reflected in the first reasons; those matters have already had a salutary effect upon them including by the sworn evidence of regret by way of an apology and that steps have been taken to avoid any repetition in the future. Insofar as the claim for underpayment was concerned, it was accepted the breach was not trifling. It was submitted that in each case a penalty in the low to medium range was appropriate having regard to all of the considerations including totality.
Resolution
An application for the contravention of a civil remedy provision, including the relief that a person pay a pecuniary penalty is one of the long-standing means of providing such protection by a regime for compliance and enforcement and which is now found in Ch 4 of the Act. Subject to qualifications which are not material, employees, prospective employees, employer organisations and industrial associations have standing to apply for an order in relation to the contravention, or threatened contravention, of a civil remedy revision. Section 545 identifies the types of order which may be made in relation to a contravention of a civil remedy provision while s 546 confers power to order a person to pay a pecuniary penalty.
The Act proscribes against taking adverse action against making an unauthorised deduction from an employee’s wage: Act, ss 323, 340. Provisions which bear the character of being civil remedy provisions are set out in the table to s 539(2) of the Act and include ss 323 and 340. Monetary limits are placed on the maximum available penalty for particular contraventions. A penalty unit as fixed for the purposes of the Act is, relevantly, $210. As concerns a body corporate, the pecuniary penalty must not be more than five times the maximum number of applicable penalty units: Act s 546(2). The maximum potential penalties reflect the seriousness with which the legislature regards a contravention bearing that character: Act, s 557A(1). By extension, the imposition of maximum penalties of a lesser magnitude may be seen as the legislature’s acknowledgement that other contraventions are properly located at a different, lower point on the yardstick of appropriate penalties.
The power conferred by s 546(1) is not engaged unless the court is satisfied a person has contravened a civil remedy provision. The applicant, a person who was affected by the respondent’s contravention of the two civil remedy provisions in issue, brought an application for the determination of his claims for such contraventions. Relief was sought under both ss 545 and 546. Upon the claim for adverse action, the applicant established he had suffered loss as a result of that contravention and orders were made pursuant to ss 545(2)(b) and 547(2) of the Act that the respondent pay compensation of $110,000 and pre-judgment interest thereon. Further, the applicant established a contravention of s 323(1) of the Act by withholding the sum of $12,846 from the applicant’s final pay which sum, with interest, has now been paid.
This court is an eligible court for the purposes of the imposition of a penalty in respect of a contravention of a civil remedy provision of the Act. The respondent has contravened ss 323 and 340, each being civil remedy provisions. Within Pt 3-1 of Ch 3 of the Act, Rights and Responsibilities of Employees, Employers, Organisations, etc, s 336 provides that objects of that Part include the protection of workplace rights. As noted in the first reasons, such protections can be traced to 1901 and serve the important function of providing legislative protection against the infringement of general protections including by proscribing against adverse action for designated reasons.
An essential object of the power to impose a penalty is to secure observance with the protective provisions of the Act and to do so for the purposes of achieving deterrence. I have addressed the factors which bear upon the quantification of a penalty and expressed my views on them.
As made plain in the first reasons, I did not regard the adverse action or the withholding of monies to which the applicant was legally entitled as merely trifling matters. To the contrary, as a result of the respondent’s adverse action, the applicant suffered loss of $110,000 and as a result of the manner of his dismissal, it was not until the eve of trial that a sum of $12,846 representing accrued entitlements that had been withheld were paid to him (such sum representing ~10 percent of the applicant’s base retainer)..
I have reflected upon each of the matters upon which submissions were made and conclude it is appropriate to order that the respondent pay a penalty for each contravention. Upon my reconsideration of the aggregate of the applicable penalties, and the several factors addressed above, an appropriate response is to order the respondent to pay a penalty of $10,000 in respect of the contravention pursuant to s 323 and a penalty of $15,000 in respect of the contravention pursuant to s 340 of the Act; in all, the sum of $25,000. I consider that penalties of this magnitude will operate both by way of specific deterrence on the respondent and as general deterrence in this industry. I do not consider that such penalties could be seen as merely a cost of doing business. I cannot find that such penalties are crushing or oppressive.
Recipient of civil penalty
It was submitted when making an order that the respondent pay a penalty, the court should order pursuant to par 546(3)(c) of the Act, that the entire penalty be paid to the applicant. It was submitted that to do so conformed to the ‘usual’ and settled practice in such cases. Consideration of the principles which inform that usual practice is of assistance.
As raised in submissions, a question posed by s 546(3) is whether a pecuniary penalty that has been determined to be appropriate be paid, and quantified, pursuant to s 546(1) should be ordered to be paid to the applicant. Counsel were unaware whether the Commonwealth had intervened in proceedings or made submissions as to the operation of s 546(3) on this issue.
Although the authorities which consider the settled practice to make the ‘usual’ order address extrinsic and historical materials, it is useful to consider the proper construction of s 546, the principles upon which it operates and how they have developed. Section 546 reads:
Pecuniary penalty orders
(1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).
Determining amount of pecuniary penalty
(2) The pecuniary penalty must not be more than:
(a) if the person is an individual--the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or
(b)if the person is a body corporate--5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
Payment of penalty
(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
Recovery of penalty
(4)The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.
No limitation on orders
(5)To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.
The proper construction of s 546(3) is of importance in consideration of the authority it confers to order that a pecuniary penalty be paid to one or more of the three recipients identified in that provision. In Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, [69]-[70], McHugh, Gummow, Kirby and Hayne JJ stated:
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’. Thus, the process of construction must always begin by examining the context of the provision that is being construed.
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court to determine which is the leading provision and which the subordinate provision, and which must give way to the other’. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. (Citations omitted)
More recently, with reference to the principles in Alcan, in Arios Diagnostics, Inc v Sequenom, Inc (2021) 391 ALR 473, Middleton, Nicholas and Burley JJ stated at [259]:
In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation: Acts Interpretation Act 1901 (Cth) s 15AA.
Specific principles applicable to civil penalties do not require further elaboration in the present context and are addressed in Pearce & Geddes, Statutory Interpretation in Australia 9th Ed (2019), [9.17]; Herzfeld & Prince Interpretation 2nd Ed (2020), [10.90].
Textual & contextual considerations
While both ss 546(1) and (3) are framed in discretionary terms, their operation requires some consideration. Section 540 identifies the classes of employee, employer, outworker and organisations who may bring a proceeding for orders of the kind for which provision is made by Div 2 of Pt 4-1 of the Act. As relevant to this proceeding, only employees who are, or will be, affected by a contravention may apply for such orders: Act, par 540(1)(a).
The power to impose a penalty is conferred by s 546(1), while the authority to determine to whom it is to be paid lies in s 546(3). The determination of whether it is appropriate to order that a person pay a pecuniary penalty and the quantum of that penalty under s 546(1) is anterior to and separate from determination of the order that should be made under s 546(3). Treating s 546(1) as the leading provision and s 546(3) as the subordinate, it is apparent that if no penalty is determined to be payable, the exercise of authority conferred by s 546(3) does not arise. The sole source of power to make an order that a person pay a pecuniary penalty is s 546(1): Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, [22], [39], [106]-[107] (ABCC v CFMEU). The power conferred by s 546(1) is constrained by requirements that an application has been made by a person who may do so and that the court is satisfied it is ‘appropriate’ to make such order. What is appropriate for the purposes of s 546 “falls to be determined in light of the purpose of that section and is not to be artificially limited”: cfABCC v CFMEU (2018) 262 CLR 157, [103]. This constraint necessarily applies to the determination that an order should be made and to quantification of any penalty that is appropriate to be imposed.
The exercise of authority under s 546(3) generally plays no part under s 546(1) in the anterior step in determining whether it is ‘appropriate’ that a penalty be imposed or in as informing the considerations which may be relevant to the exercise of discretion in quantifying the sum of the penalty that is appropriate to be imposed. Section 546 proceeds on the basis that a contravention has been made out. It also proceeds on the basis that the power to make any order is not engaged unless an application has been made. This draws attention to the identity of the applicant, who may be any one of the persons on whom the entitlement to bring a proceeding is conferred by s 540(1). The issues raised for determination by s 546(1) concern whether it is ‘appropriate’ that any, and if so what, penalty be imposed for a contravention.
Identification of which recipient is to be paid a penalty should play generally no part in whether or not it is appropriate that a penalty be paid or what the quantum should be. One qualification may arise from the circumstance that s 546 preserves in the court a flexibility in the exercise of discretion, as where the principal contravener has become insolvent and there is no prospect a person affected by the wrong would be paid the compensation as determined under s 545(2). The court could take those matters into consideration in the determination of whether it was appropriate to make an order for the payment of a pecuniary penalty by a respondent who has contravened the Act as an accessory (such as a director of a company now in liquidation).
The court may order that the pecuniary penalty, or a part of the penalty, be paid to any one of the Commonwealth, or a particular organisation or a particular person: Act, s 546(3). The purpose of s 546 is about penalising a contravention of the law, however, a penalty so ordered to be paid may then be recovered as a debt due to the person to whom the penalty is payable: ABCC v CFMEU (2018) 262 CLR 157, [10], [28], [55], [120]. As Gageler J noted in ABCC v CFMEU (diss’ as to the result), while penalties are imposed to set a price on contravention, that price is heavily regulated by the Act, including by the cap placed on the maximum penalty that may be imposed and by the proscription against imprisonment of a person who fails to pay a penalty: (2018) 262 CLR 157, [55]; see Act, ss 546(2), 571.
Although s 546(3) is framed in discretionary terms, the nature of the power conferred is usefully considered by reference to the principles stated in Julius v Lord Bishop of Oxford (1880) 5 App Cas 214, 222-223. There Earl Cairns LC, recognized some legislative provisions conferring a faculty or power are “merely making that legal and possible which there would otherwise be no right or authority to do”. As the Lord Chancellor reasoned of such provisions:
They confer a faculty or power and they do not of themselves do more than confer a faculty or a power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with the duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so.
The essential purposes of penal provisions such as s 546 are to secure compliance with, and to provide sanctions for, contraventions of laws enacted for the benefit of the public. As further appears, the power to impose a penalty is conditioned by a number of factors including that relevantly, the proceeding for a penalty may only be brought by a person who is, or may be, affected by a contravention of the Act and may only be imposed when, and in such sum, as the court considers appropriate in the particular circumstances of a case. Notably, in contrast with long settled principles relating to common informers, s 546 does not confer a right at large on any person who would wish to prosecute such a claim whether for profit or public benefit.
As with rights of appeal or claims for legal costs, each of which were treated at common law as being entirely creatures of statute, jurisdiction and power to subject a person to liability for a pecuniary penalty, and to order the penalty is payable to a specific person, depend on statute. As a matter of statutory construction, I approach s 546(3) on the basis that once the court has determined pursuant to s 546(1) that it is appropriate to order a person to pay a pecuniary penalty, the permissive terms of s 546(3) which provide that the “court may order”, are employed to confer authority which must be exercised when the circumstances are such as to call for its exercise: cf Ward v Williams (1955) 92 CLR 496, 505-506 (The Court); Leach v The Queen (2007) 230 CLR 1, [38]; see also Pearce & Geddes, [11.5]-[11.17]; Herzfeld & Prince, [4.230] at p.80. Once it has been determined under s 546(1) that the power should be exercised to order a person to pay a penalty and the liability for the penalty has been quantified, the court is seized with authority to order that the penalty or a part of the penalty may be paid to one or more of the Commonwealth, or a particular organisation or a particular person. A contrary conclusion would strip the imposition to pay a pecuniary penalty of any meaningful content and would be inconsistent with the object and purpose of the Act and in particular, the protective provisions in Div 2 of Pt 4-1: cfMurrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118, (Murrihy) [119] (Jessup J); Sayed v Construction Forestry, Mining and Energy Union (2016) 239 FCR 336 (Sayed), [121] (Tracey, Barker and Katzman JJ). The discretionary power conferred by s 546 is in addition to the power conferred by s 545 to make other orders upon being satisfied that a person has contravened, or proposes to contravene, a civil remedy provision: Act, s 546(5).
Once the court has determined pursuant to s 546(1) it is appropriate to order that a person who has contravened a civil remedy provision should pay a pecuniary penalty, s 546(3) is engaged. The authority conferred by s 546(3) retains its discretionary character but must then be exercised judicially on grounds which do not go beyond the scope of its express terms and those of Div 2, Pt 4-1 of Ch 4 and the objects of the Act more generally. The discretions are not at large: ABCC v CFMEU (2018) 262 CLR 157, [54]. As the Full Court recently observed, “Every statutory power, however widely expressed, is limited by the text, subject matter, scope and purpose of the statute. The purpose of the grant of a power or the purpose for which the power may be exercised and the outer limits of the exercise of the power are generally speaking, to be derived from the statute conferring it”: CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCAFC 171, [16]. In this case, amongst the express objects of the Act is the provision of effective compliance mechanisms: Act, par 3(e), 4(1)(c).
What principles inform the exercise of authority to order that the pecuniary penalty be paid in whole or part to one or more of the identified recipients? The text of s 546(3) indicates that the only recipients for payment of a pecuniary penalty which has been determined to be paid by a contravener pursuant to s 546(1) are those identified in pars 546(3)(a)-(c). It also confirms that the court is authorised to order that the penalty or a part of the penalty, be paid to the Commonwealth or a particular organisation or a particular person. Paragraphs 546(3)(a)-(c) should be read conjunctively such that an order for payment of the penalty may properly apportion the payment between more than one of those recipients. But for the principles to be addressed as to the making of the ‘usual’ order, there seems no reason to conclude that the court might not ordinarily order the penalty be paid amongst the designated recipients if to do so is within the scope and purpose of s 546, Div 2 of Pt 4-1 or the Act more generally.
Insofar as s 546(3) authorises that a part of the penalty may be paid to one or more of those recipients, the provision does not indicate or dictate when or how the court must so order or do so in a particular way. The answer to that question is to be discerned “from the context, from the particular provisions, or from the general scope and objects of the enactment conferring power”: Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51, 64 (Mason CJ citing Ward v Williams (1955) 92 CLR 496, 505-506); 85-86 (Brennan J, Toohey and McHugh JJ agreeing), 97 (Dawson J). In Klein v Domus (1963) 109 CLR 467, 473, Dixon CJ (McTiernan and Windeyer JJ agreeing) stated that: “the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case”: So in Minister for Industrial Relations for the State of Victoria v Esso Australia Pty Ltd (2019) 268 FCR 520 at [90], White, Lee and Wheelahan JJ stated with reference to other provisions of the Act conferring discretion: “But within the bounds of the statute, which are shaped by terms, scope, purpose, and objects, lay an area of discretion for the FWC to exercise”. Those statements contra-indicate the rigid use in making a usual order which may exclude from consideration whether the principal object of s 546 might not be better achieved by making orders that a part of the penalty be paid to each of the applicant and one or more of the Commonwealth and/or a particular organisation having regard to the justice of the case in all of the circumstances that may be relevant to the exercise of the discretion.
In Royal Insurance, Brennan J analysed a claim for recovery of an overpayment of stamp duty in terms that once a legal liability to pay existed, upon the principle stated in Julius v Lord Bishop of Oxford, the entitlement to relief flowed from the legal liability being established. By parity reasoning, once the court has determined pursuant to s 546(1) of the Act that it is appropriate to order that a person pay a pecuniary penalty, exercise of the authority to order that it be paid to a particular recipient is to be determined by reference to s 546(3), in the context of Div 2 of Pt 4-1, having regard to the scope and objects of the Act as a whole. In contrast with Royal Insurance, however, s 546(3) does not purport to create an entitlement in any particular recipient to be paid the penalty. And as stated by the plurality in ABCC v CFMEU (2018) 262 CLR 157, [120] “Section 546 is not about the creation and collection of debts; it is about penalising a contravention of the law.”
Compliance and deterrence are opposite sides of the same coin. Since the principal concern of s 546 is to secure compliance with, deterrence against, contraventions of civil remedy provisions, those dual objects may be enhanced by construing s 546(3) with an eye to both specific deterrence, by making an order for the payment of a part of the penalty to the individual who had been affected, and general deterrence, by the making of a further order for payment of a part of the penalty to the Commonwealth or to a particular organisation (or both).
Creating an enforceable obligation that a contravener pay a part of a penalty to the person affected by the wrong would act as a specific spur to deter repetition – the making of an order for payment of a part of the penalty to the Commonwealth or a particular organisation would likewise operate as a general deterrent. The separate penalties would in a practical sense reinforce the nature of the specific deterrence and the general deterrence.
Consideration of the authority conferred by s 546(3) to order that a penalty be paid to a particular recipient is informed by the statutory context of Div 2, Pt 4-1 in Ch 4 of the Act. Within Div 2 of Pt 4-1, separate provision is made by ss 545 and 546 for the making of orders to enjoin or remedy the contravention of a civil remedy provision, including for compensation and reinstatement on the one hand and the making of pecuniary penalty orders on the other. The provisions are distinct. So much is made clear by s 546(5) which provides, for the avoidance of doubt that a court may make a pecuniary penalty order in addition to one or more of the orders which may be made under s 545. These provisions are relevant as confirming that the question of compensation is generally no part of the court’s consideration whether it is appropriate to impose a penalty, the quantum thereof or to whom it should be paid.
Statutory entitlements under the Act to compensation and a penalty are distinct. Compensation is one form of relief available to a person who establishes that he or she was a person affected by a contravention of the Act where he or she established loss was suffered because of that contravention. By the combined operation of 540(1)(a) and 545(2)(b), rights of action to recover compensation are conferred on a person who has suffered loss because of the contravention of a civil remedy provision. Contrastingly, the right to bring a proceeding for a pecuniary penalty is framed in different terms. As concerns proceedings for pecuniary penalty orders, by the combined operation of 540(1)(a) and 546(1), where an employee is an affected person, he or she may on application, seek an order for the payment of a pecuniary penalty against a person who has contravened a civil remedy provision. Payment of penalty, is a subject separately addressed by s 546(3) which does not direct that the penalty must always be paid to the applicant. Section 546(3) is expressed in facultative terms which permit that the court may order that the penalty, or a part thereof, be paid to any one of three identified recipients. The provision is important having regard to the objects of Div 2 in Pt 4-1 and, in particular, the need to secure effective means of achieving specific and general deterrence. That is because, once the court has determined it is appropriate that a contravener should pay a pecuniary penalty and that penalty has been quantified, s 546(3) authorises that an order may be made which requires the contravener to pay the penalty, or a part thereof, to one or more identified recipients. By this means, s 546(3) also confers statutory authority in the court to make an order in favour of a recipient who may not be a party to the proceeding.
By s 540, an affected person may apply for orders provided for by Div 2 in Pt 4.1 of Ch 4. Within Sub-div B of Div 2, Orders, ss 545-547 provide for a range of relief including injunctions, compensation, reinstatement, pecuniary penalty orders and interest. As material to this case, ss 545 and 546 deal with substantively different subject matter. The object and purpose of the provisions are separate and distinct: cfABCC v CFMEU (2018) 262 CLR 157, [103]. In Thomson v Lord Clanmorris [1900] 1 Ch 718, Vaughan-Williams LJ observed at 722 and 728, there is a distinction between an action brought on a statute and an action given by statute. Lindley MR at 725 identified that where the statute created an action for a penalty, it was not by way of compensation to the person injured but rather with the object of securing punishment for a contravention, “although he might put some of it in his pocket.”
Of present significance is that while each of ss 545 and 546 address the kinds of relief which may be granted where an application is made by a person affected by the contravention of a civil remedy provision, the entitlement to compensation depends upon that person establishing that he or she suffered loss because of the contravention. By contrast, any entitlement in a person to an order that the whole or a part of a penalty be paid rests upon the scope, purpose and objects of the Act as concern proceedings for the imposition of a penalty. Since s 546 “is about penalising a contravention of the law”, it is that purpose, within the scope of s 546, the objects of the Act and the purpose of making orders under Pt 4-1 of Div 2 which inform the making of an order for the payment of a pecuniary penalty including whether it is appropriate to do so, what amount is appropriate to order by way of penalty and the identity of the recipient[s] to whom the penalty, or a part of the penalty, should be paid.
The exercise of power to make an order under sub-s 546(1) creates an inchoate liability in that a contravener is thereby ordered to pay a pecuniary penalty. The liability is crystallised upon the separate power conferred by s 546(3) being exercised and an order made that the penalty is to be paid to one or more specific recipients. A debt is then created by operation of s 546(4). Where the court is satisfied a person has contravened a civil remedy provision, its exercise of the powers conferred by ss 546(1) and (3) result in the statutory debt created by s 546(4). Until an order has been made pursuant to any one or more of pars 546(3)(a)-(c), no such person has any legal entitlement to that penalty. Upon the principles considered above, this approach to those provisions gives s 546 an harmonious construction.
Legislative history
In Alcan (NT) Alumina Pty td v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, Hayne, Heydon, Crennan and Kiefel JJ stated at [47]:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. (Citations omitted)
Considerable attention has been paid to the legislative history of provisions from which s 546 was drawn and the authorities which have considered those provisions. Conclusions emerging from an examination of this history are that since 1904, Commonwealth industrial legislation has: (1) identified the classes of person and organisation upon whom standing is conferred to bring a proceeding for contravention of an award and to claim relief by way of penalty; (2) included members of certain organisations within the class of persons authorised to bring a proceeding; (3) always authorised the court to make an order that the penalty be paid to one or more of the revenue, a particular organisation or person; (4) authorised the making of such orders without expressly fettering the discretion to do so.
In Part V of the Conciliation and Arbitration Act 1904 (Cth), par 44(2)(c) conferred a right of action in a member of a registered organisation affected by the breach or non-observance of an order or award to bring a proceeding for recovery of a penalty in a court of summary jurisdiction constituted by a Police Stipendiary or Special Magistrate or in the Commonwealth Industrial court. By s 45 of that Act, power was conferred on a court to order that the penalty, or any part thereof, be paid into the Consolidated Revenue Fund, or to such organisation or person as was specified in the order. Neither section stipulated the maximum amount of a penalty. It is unnecessary to trace the legislative amendments to those provisions in detail, save to note that ss 44-45 were successively renumbered as ss 59-60 and then as ss 119-120 in later iterations of the 1904 Act. They are also addressed in Sayed (2016) 239 FCR 336, [60]-[61].
In Part VIII of the Industrial Relations Act 1988 (Cth), s 178(1) conferred power in a court to impose a penalty for the breach of an award or order. Again, a right of action to sue for such penalty was conferred on, amongst others, a member of an organisation who was affected by the breach. Powers conferred by s 356 of that Act as to the payment of the penalty in terms corresponded to s 45 of the 1904 Act. As at 1988, the maximum penalty which could be imposed by the court varied from $500 to $1,000: s 178(4)(a).
As noted in Sayed at [65]-[66], such provisions were amended in the Workplace Relations and Other Legislation Amendment Act 1996 (Cth), and then renumbered as ss 719 and 841 respectively in the Workplace Relations Act 1996 (Cth). By the 1996 Act, the maximum penalty which could be imposed by the court varied from $1,000 to $10,000: s 178(4)(a).
The Act, as in force since 2009, conferred corresponding entitlements by s 546. As concerned quantum, the legislative regime for the computation of a maximum penalty under the Act, may extend to up to 600 penalty units (or $126,000 in the case of an individual), or 2,400 penalty units (being $504,000 in the case of a body corporate): Act, ss 539, 546(2). Undoubtedly, this increase in pecuniary penalties reflects the increasing seriousness with which the legislature regards the contravention of industrial legislation. However, adherence to the making of a ‘usual’ order may result in the penalties (which are determined to be appropriate to secure specific and general deterrence against further contraventions) being payable to the applicant in their entirety unless the separate discretion conferred by s 546(3) is exercised in a manner which involved consideration of the scope and purpose of that provision in light of the purpose of Pt 4-1 of Div 2 and the objects of the Act as a whole.
Writing extra judicially, Justice Gilmour observed that in the period 1988-2011 there had been a 3000% increase in the maximum penalty for a contravention of the workplace laws now enshrined in the Act: Gilmour, Civil Penalty Contraventions [2011] FedJSchol 21. As his Honour observed, as at 2011, the stipulated value of a penalty unit was $110. It is now $210 with the result that there has been an increase of ~6000% in such maximum penalties for contraventions under the Act. When paying regard to the objects, purpose and scope of the discretionary power conferred by s 546(3), the further increase in penalty may be noted. Justice Gilmour’s paper did not address the question of to whom a penalty should be payable. Objects stated in s 3 of the Act are concerned with providing a balanced framework for, amongst other things, workplace laws that are fair and acknowledge the special circumstances of small and medium-sized business. Objects of that kind do not detract from the principles which guide the quantification of a penalty considered above.
Extrinsic materials
The explanatory memorandum to the Fair Work Bill 2008 (EM) has received some attention for the purposes of informing the scope of the power conferred by s 546(3). The EM addressed cl 546 at [2155]-[2162]. As concerned cl 546(3), the EM stated at [2157]-[2158], “Ordinarily, any pecuniary penalty awarded by the court is paid to the applicant or, in the case of proceedings brought by a Commonwealth official such as an inspector, to the Commonwealth (on the basis that the applicant represents the Commonwealth). Also, it gives the court flexibility to award the penalty to someone other than the plaintiff or applicant where the plaintiff or applicant requests. For example, where an inspector brings penalty proceedings against the director of a company that has gone into liquidation, the inspector might request the court to pay any penalty to an employee rather than the Commonwealth in circumstances where the employee is out of pocket as a result of the company being liquidated.”
In Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 94 ALJR 818, Gageler J stressed that “statements of legislative intention made in extrinsic materials do not ‘overcome the need to consider the text of a statute to ascertain its meaning’” and that the quality of assistance derived from extrinsic materials turned upon their provenance and origins. His Honour stated at [67] (albeit in dissent as to the proper construction of the subject provision), that:
Applying the modern approach to statutory interpretation, consideration of context, including consideration of legislative history and extrinsic materials, ‘has utility if, and in so far as, it assists in fixing the meaning of the statutory text’. The quality and extent of the assistance extrinsic materials provide in fixing the meaning of statutory text is not uniform. The quality and extent of the assistance varies in practice in ways unable to be fully appreciated without regard to the provenance and conditions of creation of the extrinsic materials.
See also Kiefel CJ, Nettle and Gordon JJ at [13]-[14]; Edelman J at [95]-[96].
While the steps culminating in the preparation of the EM and in particular [2155]-[2162] are not known, it is apparent that relatively little was said about cl 546(3). Nothing in the EM suggests any wider justification for the adoption of a default rule whereby, in addition to an order for the recovery of compensation, an order should be made for the payment of a penalty to the applicant. By contrast, the text of pars 546(3)(a)-(c) is clear: the court may order that the penalty, or a part of the penalty, be paid to: (a) the Commonwealth; or (b) a particular organisation; or (c) a particular person. I can see no justification in the EM for reading words into s 546(3) so as to warrant the adoption of a hardened default rule that ordinarily orders be made for the payment of the whole of a penalty to the applicant in those cases where the proceeding is brought for that party’s own benefit. The power conferred by s 546 is a power conferred on a court: Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Company Inc (1994) 181 CLR 404, 421. The EM cannot be relied on to displace the clear meaning of the text of s 546: Alcan, (2009) 239 CLR 27, [47]. Upon the authorities considered below, perhaps the highest justification for making the usual order is as a necessary implication that a part of the penalty should be payable to a successful applicant having regard to the rationale that to do so will enable the protective provisions of the Act to be policed and thereby not stultified.
The object of deterrence is achieved in the first instance by the making of an order under s 546(1) that a person pay a pecuniary penalty. The distinct objects of specific and general deterrence may be reinforced by making orders under s 536(3) that a part of the penalty be paid to the applicant and a part to the revenue and/or a particular organisation. As the early cases illustrate, the text of particular penalty provisions frequently provided that the penalty be paid in part to the applicant, the Crown and in part to the public body for whose benefit the law existed (whether it be a poor house, sanitary body, local councils, church or the like) or those charged with a public duty. In the context of this Act, an order for payment to the Commonwealth or a particular organisation would directly or indirectly achieve similar objects inasmuch as the Fair Work Ombudsman bears such responsibility as do industrial organisations in important respects for the benefit of their members and more widely the general public.
It is useful to recall that the origin of ss 540(1) and 546 to bring a proceeding for orders for the imposition of a pecuniary penalty do not derive from the ‘common informer’ provisions which allowed the plaintiff to pursue personal profit or benefit. Rather, they originate in actions that could be brought to protect a public interest. Notwithstanding that s 540 of the Act is not a common informer provision but confers a right of action on a specific class to the exclusion of any others, it’s essential object is to enable specified persons to bring an action in the public interest for the enforcement of the protective provisions of the Act. The distinct nature of the power serves to explain why questions of compensation and profit are not relevant to the exercise of the discretion conferred by s 546(3). This conclusion is reinforced by the statement in ABCC v CFMEU (2018) 262 CLR 157, [120] that s 546 is about penalising contraventions of the law, not the creation and collection of debts. As the authorities confirm, any ‘entitlement’ to receive the whole or a part of a penalty that is to be imposed, is brought into existence by, and depends on, the exercise of the discretion conferred by s 546(3) to make an order as to which of the one or more persons should be the recipient of the whole or a part of that penalty. Entitlements to compensation are addressed by s 545(1). Section 546 is not concerned with, and the exercise of discretion is not directed to, personal profit or benefit.
Those observations inform rather than detract from the underlying rationale for the making of an order that a penalty or a part thereof be paid to the person who brought the action. It is important that the public interest in securing compliance with the protective provisions of the Act not be undermined or stultified as would occur absent the exercise of the discretionary power conferred by s 546(3) to order that a part of the penalty be paid to the applicant.
Notions of symmetry were employed in Sayed essentially to illustrate how the recipient of a penalty would, depending on the individual case, be the individual applicant who also brought a claim for compensation, the organisation (or its representative) that had brought the claim on behalf of affected members or an inspector on behalf of the Commonwealth. Considerations identified in Sayed (2016) 239 FCR 336, at [72] as setting the background as to why a person who had brought a proceeding in relation to the contravention of a civil remedy provision should be the recipient of the penalty, reflect a deeply entrenched policy that the public interest in the imposition of a penalty is deterrence and that it would stultify policing of such provisions if orders were not made directing payment of the penalty to a successful applicant. I agree the policy considerations ingrained in par 546(3)(c) may speak loudly to making an order that a penalty, or a part of the penalty, be paid to a successful applicant, particularly where the non-industrialised applicant has been pressed to judgment and that the rationale for making an order that the successful applicant be paid the pecuniary penalty or a part thereof is, as Jessup J observed, to be given appropriate weight: Murrihy, [116].
But that reasoning does not address the text of s 546(3) which confers express power to order that the whole or a part of a penalty be paid to one or more of the three recipients identified in s 546(3). Sayed did not address risks of asymmetry which inhered in a proceeding brought by an applicant to vindicate his or her own claims for compensation were coupled with claims for the imposition of a penalty. Commonly, both claims are grounded upon alleged contraventions of several civil penalty provisions. It remains important to determine separately the claim brought to vindicate the infringement of a personal entitlement to compensation from the claim for the imposition of a penalty in the claim brought in the public interest. To do otherwise risks that sight is lost of the personal nature of the entitlement to compensation and the nature of any entitlement to a penalty. Particularly is that so where the claims may involve a series of contraventions with the not infrequent result that the combined contraventions will attract penalties that outstrip the loss suffered by, and the compensation to which the applicant is legally entitled, several times over. There is something to be said for the view that the ‘settled principle’ was stated at time when the scope of the penalty available to be imposed represented a fraction of the penalty that can now be imposed. So too, when first enacted, the jurisdiction was generally to be exercised in summary proceedings whereas now, it commonly falls to be exercised by a superior court. Again, sight may be lost altogether of the quantum of the penalty in the exercise of the power conferred by s 546(3).
Further, in Sayed, the Full Court agreed generally with Jessup J’s reasoning in Murrihy. In that proceeding, Jessup J made orders which apportioned the penalty for payment between the applicant and the Commonwealth. Nothing in Sayed indicates any criticism of the discretionary exercise of power by the orders made in Murrihy. Sayed was fundamentally concerned to resolve questions of ‘windfall’ in circumstances where an order for compensation had also been made and to confirm that compensation and profit were not relevant considerations to the exercise of discretion under s 546(3).
Upon the principles considered above, notions of compensation and profit are not relevant considerations to the exercise of the discretion conferred by s 546(3). To adapt the reasoning in Sayed at [120], the rejection of those matters as relevant considerations does not support a conclusion that the whole of a penalty should in all cases be awarded to a successful applicant. It merely draws attention to the need to identify the considerations that are relevant to the exercise of that power. Considerations which are of direct relevance to the exercise of power under s 546(3) are the scope, purpose and object of the provision, viewed in the context of Div 2 of Pt 4-1 and the Act as a whole. The unqualified adoption of a settled principle for making a ‘usual’ order has potential to risk that the exercise of the power conferred by s 546(3) as to whom a penalty is to be paid, will simply merge with exercise of power conferred by s 546(1) in determining whether it is appropriate that a person should be ordered to pay a penalty and the quantification thereof. Sections 546(1) and 546(3) raise quite separate considerations.
Nothing is gained by comparing the quantum of penalties under earlier regimes with those which apply under the present Act. The point is more fundamental. Observations that the maximum penalty which could previously have been imposed “would have been highly unlikely to compensate a party bringing a proceeding for the costs incurred in doing so” were endorsed in Sayed at [95]. The legislative regime for the computation of a maximum penalty under the Act may be up to 600 penalty units (in the case of an individual), or 2,400 penalty units (in the case of a body corporate) for a single contravention. At the same time, penalty units have increased from $110 to $210. Sayed did not examine the marked increase in the range of maximum penalties from those which existed previously from 1904 and those which may be imposed under the Act. In Sayed, little attention was paid to the power to order that a part of the penalty be paid to different recipients: see, however, at [101]. However, the scale of the penalties which may now be imposed invites consideration of whether the exercise of discretion to make an order directing payment of the penalty need not be addressed on an “all or nothing basis.” The power is discretionary. As compensation and profit are irrelevant to the exercise of power, the outer limits of the power conferred by s 546(3) authorise the penalty to be appointed between the three identified recipients. It seems difficult to conclude that it would be arbitrary or capricious to order that a penalty be apportioned. Conversely, to decline to exercise discretion by declining to award at least part of a penalty to a successful applicant might well be so, particularly having regard to the nature of the provisions and their rationale.
Questions of so-called windfall have been considered above and on the facts of the cases examined, the issue did not arise or was not made out. The concept of windfall was not ruled out as having no application as a matter of principle (the scope of which remains to be settled). However, in cases where substantial penalties are to be imposed pursuant to s 546(1) as a result of conduct which may constitute multiple contraventions, it remains useful to recognise that the origins of the discretion conferred by s 546(3) are not based on actions which authorised the recoupment of either benefit or profit. Section 546(3) is far more closely aligned with those provisions which conferred authority to direct that a penalty be divided between the successful applicant, the body responsible for or charged with the enforcement of the law and the Crown.
Having regard to the text of s 546(3) in the context of s 546(1) and Div 2 in Pt 4-1 of the Act, it is not immediately apparent why the fundamental object of deterrence would be undermined if orders were made directing that a part of the pecuniary penalty was paid to the applicant and a part to a particular organisation or the Commonwealth. The quantum of a penalty does not increase where the court directs some portion of it be paid to a third person or persons: Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309, [40] (Banks-Smith J).
I have reflected upon a further consequence of maintaining the settled principle for making the usual order that the whole of the penalty be paid to an applicant. In a number of cases, it has been observed that the making of the ‘usual’ order may be contrary to the administration of the interests of justice. One increasingly important interest is the early resolution of proceedings. In my view, there is something to be said that the earlier resolution of proceedings for the imposition of a penalty for contravention of the Act may be inhibited by an embedded assumption that a successful party will be entitled to the usual order. While the principal purpose of a penalty is to secure compliance with, and deter contravention of, the protective provisions of the Act, those purposes intersect with objects of other legislation. More precisely, it is only at the point where an application has been made that the court is authorised to determine whether, and if so what, penalty should be imposed, by whom and to whom it should be paid and in what proportions. The court is obliged in imperative terms to decide a proceeding so that as far as possible all matters in controversy between the parties are completely and finally determined. This object is now constrained by the overarching purpose of modern litigation which requires the court, the parties and their practitioners to facilitate the just resolution of a dispute according to law and as quickly, inexpensively and efficiently as possible: Federal Circuit and Family Court of Australia Act 2021 (Cth), ss 43, 190. Those objects should not detract in any way from the rights and entitlements conferred by Pt 4-1 of Div 2 in Ch 4 of the Act, including to compensation and to seek an order for the imposition of penalties. However, a settled practice for making a usual order might now appropriately be reviewed as having a potential to inhibit the more efficient and inexpensive resolution of disputes, particularly in cases where the parties’ dispute was pressed to judgment where it might otherwise have been resolved at an earlier point. The penalty that is appropriate to be imposed should be proportionate to the proven contravention and the facts and circumstances of the particular case. The penalty, or penalties will not infrequently not be for the maximum sum that may be imposed.
Despite the respondent’s submission that it did not oppose an order pursuant to par 546(3)(c) that the penalty be paid to the applicant, this issue was raised by the court in the course of submissions and upon which I have reflected, particularly given the reliance upon Sayed. The present case was not brought by an inspector of the Fair Work Commission or by any industrial organisation. Nor was the proceeding brought by the applicant on behalf of any such organisation such as to engage the so-called Gibbs exception where the applicant had instituted a proceeding on behalf of an industrial organisation or its members, such that payment of the penalty to the applicant constituted payment to a person who had suffered no loss in consequence of the contravening conduct: see also CPSU and McIlwain. But as the later cases confirm, the question of compensation for loss is irrelevant for the purposes of s 546(3).
The proceeding brought by the applicant is to vindicate the rights – statutory and contractual – which inhered in him. Insofar as statutory claims were brought by a person affected by the alleged contraventions, he was a person entitled to apply for orders under Div 2 of Pt 4-1, being both compensatory and penal. It was brought to protect and vindicate both private and public rights. Each claim was based on the infringement of workplace rights conferred by Div 3 of Pt 3-1 in Ch 3 of the Act. The available relief for compensation is personal. The relief available for the claim brought in the public interest for the same contravention is penal.
The present case bears this dual quality. First, it is a proceeding brought to vindicate a personal claim upon several causes of action arising from the applicant’s contract of employment and the statutory protections which overlaid it under ss 323 and 340 of the Act. Secondly, relief is sought for the imposition of penalties by reason that several of the causes of action alleged in the proceeding also constitute the contravention of a civil remedy provision under the Act. For present purposes it is important to maintain the distinction between, and not to merge, the applicant’s claims to vindicate personal rights and his standing in relation to penalties.
Most, but not all, causes of action brought against the respondent have been established. Upon the successful claims brought forward including those proven contraventions of the Act, the applicant has obtained by judgment an award of compensation with interest. The rationale that a successful applicant be paid the pecuniary penalty or a part thereof be given appropriate weight resonates in this case where the applicant worked in a non-industrialised workplace. The applicant was left to advance and persist to judgment, including for the several claims that were made for contraventions of the Act (two of which succeeded). I adopt the findings made at [20]-[55] in consideration of each of the factors which go to the determination and quantification of the pecuniary penalty that is appropriate to be imposed in this case.
No submission was made upon any so-called windfall. This was perhaps understandable in light of the principles above. As no windfall submission was made, subject to a separate issue on certain costs, it is difficult to see why the ordinary operation of s 570 should not be applied and for such costs to be disregarded in the exercise of power under s 546(3).
Once compensation and profit are put to one side and the principles with respect to costs under ss 546 and 570 are applied, I do not consider that the justice of this case requires that the applicant be paid the whole of a penalty that has been determined to be appropriate for the particular contraventions of the case. Adherence to a settled principle that ordinarily the whole of a penalty be paid to a person who maintains the proceeding will not necessarily result in or promote the objects of the Act. The applicant maintained, to the point of closing submissions, that if reinstatement was not granted, the compensation to which he was entitled exceeded $400,000. That claim for compensation was divorced from the facts of the case in circumstances where the applicant had told the respondent during his annual reviews over several years that he intended to retire or work part-time from the age of 65 years.
Nothing in the making of orders which apportion the liability to pay the penalties to more than one of the designated recipients would undermine the principal objects of s 546; namely, specific and general deterrence. Once a price on the contraventions has been determined which has been considered sufficiently high to deter repetition by the respondent and others pursuant to s 546(1), the objects of specific and general deterrence respectively will be reinforced by framing orders pursuant to s 546(3) that require the contravene to pay a part of the penalty to the affected individual and to pay a part or parts, as the case requires, to the Commonwealth and a particular organisation.
Conclusion
I have determined the application for penalties and the orders that I consider appropriate to be made for the reasons above. The total penalties of $25,000 should be paid as to one half to the applicant and as to the other half, to the Commonwealth. In my view it will serve as a spur to deterrence that the respondent pays a part of the penalty to the applicant and a part to the Commonwealth. Orders for separate payments will underscore to the respondent and others the need for compliance with, specific and general deterrence against contraventions of, the Act. While the point is not of central significance, to some limited extent, the making of separate orders will serve to reinforce the importance of such compliance and deterrence.
A claim was made for costs which I consider was not without some merit. Conscious of s 570 of the Act, and despite the respondent’s reliance on what has so frequently been described as the unprecedented and unique circumstances presented by the Covid-19 pandemic, I consider par 570(2)(b) was engaged in the circumstances as detailed by the applicant’s outline and oral submissions in relation to specific claims for costs which would not have been incurred but for particular and unreasonable conduct on the part of the respondent in the months immediately preceding the trial. This is not the only proceeding in which the Covid-19 pandemic has been deployed as a supposed reason why it was said not to be possible either to comply with court orders or to co-operate in relation to the orderly disposal of matters required for the conduct of the trial. I will allow the applicant a sum of $3,500 for such costs.
The parties have consented in orders being made in relation to the computation of the claims for commission and interest. Although it was submitted (on two occasions) such commission and interest would be paid by week’s end, it is appropriate the order be made by consent so as to deal finally with all issues. The court acknowledges the assistance of counsel.
I certify that the preceding one hundred and sixty-four (164) numbered paragraphs are a true copy of the Reasons for Judgment of Judge A Kelly. Associate:
Dated: 18 October 2021
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