CFMEU v RGN Mining Services Pty Ltd
[2018] FCCA 162
•5 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CFMEU & ORS v RGN MINING SERVICES PTY LTD & ANOR | [2018] FCCA 162 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing – First Respondent in liquidation – Second Respondent bankrupt – whether bankruptcy a bar to imposition of civil penalties. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.58, 60, 82 Crimes Amendment (Penalty Unit) Act 2017 (Cth), sch.1 |
| Cases cited: Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 |
| First Applicant: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Second Applicant: | BRADLEY PAUL BOYLING |
| Third Applicant: | JASON SYDNEY BRETT |
| First Respondent: | RGN MINING SERVICES PTY LTD |
| Second Respondent: | RONALD GODFREY NIELSEN |
| File Number: | SYG 1566 of 2016 |
| Judgment of: | Judge Barnes |
| Hearing dates: | 26 September 2017 and 6 November 2017 |
| Delivered at: | Sydney |
| Delivered on: | 5 February 2018 |
REPRESENTATION
| Solicitor for the Applicants: | Mr Walkaden |
| Respondents: | No appearance |
ORDERS
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (the Act) the Second Respondent pay an aggregate penalty of $18,900 in respect of the contraventions of the Act referred to in the declarations made in this matter on 5 July 2017.
Pursuant to s.546(3) of the Act the Second Respondent pay the said penalty to the Construction, Forestry, Mining and Energy Union within 60 days of today’s date.
Any party have liberty to apply in relation to the implementation of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1566 of 2016
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
First Applicant
| BRADLEY PAUL BOYLING |
Second Applicant
| JASON SYDNEY BRETT |
Third Applicant
And
| RGN MINING SERVICES PTY LTD |
First Respondent
| RONALD GODFREY NIELSEN |
Second Respondent
REASONS FOR JUDGMENT
This is an application for the imposition of penalties on the Second Respondent, Mr Nielsen, in respect of contraventions of the Fair Work Act 2009 (Cth) (the Act).
On 5 July 2017 I made declarations that the First Respondent, RGN Mining Services Pty Ltd (RGN), contravened the Fair Work Act 2009 (Cth) (the Act) in relation to employee entitlements owed to Mr Boyling and Mr Brett (the Second and Third Applicants) as follows:
(1) The First Respondent contravened s.323 of the Fair Work Act 2009 (Cth) (the Act) by failing to meet the Second Applicant’s contractual entitlement to two months written notice of termination of his employment or payment in lieu thereof.
(2) The First Respondent contravened s.45 of the Act by failing to pay the Second Applicant redundancy pay as required by clause 14 of the Black Coal Mining Industry Award 2010 (the Award).
(3) The First Respondent contravened s.45 of the Act in that it failed to credit the Second Applicant with personal/carer’s leave as required by clause 26.2 of the Award.
(4) The First Respondent contravened s.45 of the Act in that it contravened clause 13.5(b)(i) of the Award by failing to pay to the Second Applicant his untaken personal/carer’s leave on termination of his employment.
(5) The First Respondent contravened s.50 of the Act in that it contravened clause 9.12 of the RGN Mining Services Pty Ltd and Western District Contractors Enterprise Agreement 2012 by failing to provide the Third Applicant with 5 weeks’ notice of termination of his employment or payment in lieu thereof.
I also made a declaration that Mr Nielsen, the Second Respondent, was involved in each of these contraventions within the meaning of s.550 of the Act and, in circumstances where RGN had gone into liquidation, ordered that Mr Nielsen pay compensation to Mr Boyling and Mr Brett (see Construction, Forestry, Mining and Energy Union & Ors v RGN Mining Services Pty Ltd & Anor [2017] FCCA 1546).
The Applicants sought that penalties be imposed on Mr Nielsen in relation to contraventions of the Act. This judgment relates to that aspect of the application.
There are two preliminary issues. First, as detailed in CFMEU v RGN, despite evidence of personal service on Mr Nielsen of documents filed in the proceedings, he did not appear on any occasion, file any documents or participate in any way in the proceedings. In accordance with the orders I made when I delivered judgment in relation to liability, the Applicants also filed an affidavit of service sworn by Gavin Bellamy on 21 September 2017 as to personal service on Mr Nielsen of the orders made by me on 5 July 2017 and the outline of submissions prepared by the Applicants in relation to penalty. These documents included notification of the date, time and place for the penalty hearing. There was no appearance by Mr Nielsen. I was satisfied he had been put on notice of the penalty hearing and that it was appropriate to proceed in his absence.
The other preliminary issue relates to the fact that on 17 August 2017 a sequestration order was made against the estate of Mr Nielsen. The Deputy Commissioner of Taxation was the petitioning creditor. The penalty hearing was adjourned so that this issue could be addressed. As attested to in an affidavit of 6 November 2017 affirmed by Adam John Walkaden, National Legal Officer for the Mining and Energy Division of the CFMEU and as is apparent from an annexed copy of a search of the National Personal Insolvency Index as at 30 October 2017 in relation to a Mr Nielsen who has the same full name and address as the Mr Nielsen who is a party to these proceedings, the Second Respondent was and remained an undischarged bankrupt as at that date.
Mr Walkaden also attested to having written to David John Kerr, the trustee of the bankrupt estate of Mr Nielsen, on 30 October 2017, advising him of the proceedings, the orders made and the Applicants’ desire to proceed with the penalty hearing. Mr Kerr was advised of the Applicant’s view that any such penalty would not be a provable debt, so that leave of the Court pursuant to s.58 of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) would not be required and informed him that if this view was wrong the Applicants intended to seek the leave of the Court to proceed. The trustee was advised of the date of the penalty hearing and invited to respond or to discuss the matter with Mr Walkaden. Mr Walkaden’s evidence is that he did not receive any response from Mr Kerr. There was no appearance by or on behalf of Mr Kerr when the penalty hearing resumed.
The Applicants filed written submissions addressing the issue of whether leave to proceed was required and, if so, whether it should be granted, as well as in relation to penalty.
Section 58(3) of the Bankruptcy Act provides:
Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
However, s.82(3) of the Bankruptcy Act is as follows:
Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.
The First Applicant is the CFMEU. It is not a creditor of Mr Nielsen. However I made orders that Mr Nielsen pay compensation to the Second and Third Applicants before he became bankrupt. Hence the Second and Third Applicants are now creditors of Mr Nielsen. Leave would be required under s.58(3) of the Bankruptcy Act if the penalties sought are provable debts within the Bankruptcy Act.
The Applicants submitted that the penalties sought against Mr Nielsen fell within s.82(3) of the Bankruptcy Act and would not be provable debts. In the alternative, it was contended that if such penalties were provable debts, then the Court should grant leave under s.58(3) of the Bankruptcy Act consistent with the principles in SBA Music Pty Ltd v Hall (No.2) [2014] FCA 1116 and Health Services Union v Jackson (No.3) [2015] FCA 694.
The penalties sought are civil penalties under the Act. In Cotis v Macpherson (2007) 169 IR 30; [2007] FMCA 2060 Driver FM (as his Honour then was) considered whether a civil penalty under the Workplace Relations Act 1996 (Cth), the forerunner to the Act, was a provable debt in circumstances where the respondent was bankrupt. Whilst the applicant in Cotis was a workplace inspector (and hence not a creditor of the bankrupt), relevantly, his Honour accepted (at [7]) that the penalties sought were not provable debts for the purposes of the Bankruptcy Act so that s.58(3) had no application. Driver FM also accepted that s.82(3) of the Bankruptcy Act made it clear that all penalties or fines imposed by courts including those which were not criminal in nature were not provable debts (see Mathers & Anor v Commonwealth of Australia (2004) 134 FCR 135; [2004] FCA 217). On this basis, his Honour found (at [10]) that for the purposes of s.82(3) of the Bankruptcy Act, the penalties sought under the Workplace Relations Act were penalties in respect of an offence against a law of the Commonwealth for the purposes of s.82(3) of the Bankruptcy Act and not provable in bankruptcy. Hence, s.58(3) was no bar to the proceedings. As his Honour observed, it followed that any penalties imposed by the Court would remain payable after the discharge of the respondent from bankruptcy and bankruptcy provided no release in respect of them.
In Fair Work Ombudsman v Finetune Holdings Pty Ltd & Anor (No.3) [2012] FMCA 883 Lucev FM (as he then was) took the same approach in relation to the imposition of penalties under the Act, observing (at [48]) that “[b]ankruptcy is no bar to the imposition of civil penalties against an individual”. In Fair Work Ombudsman v Garfield Berry Farm Pty Ltd & Anor [2012] FMCA 103 Riley FM (as her Honour then was) imposed a penalty under the Act on a bankrupt respondent on the basis (as discussed in Fair Work Ombudsman v Garfield Berry Farm Pty Ltd & Anor (2011) 9 ABC(NS) 593; [2011] FMCA 885 at [13]-[14]) that such penalty was not a debt provable in the bankruptcy of that person having regard to s.82(3) of the Bankruptcy Act and the approach taken in Mathers (also see Fair Work Ombudsman v Goldfinger Facility Management Pty Ltd & Anor (2016) 304 FLR 320; [2016] FCCA 356).
I should, as a matter of judicial comity, follow such decisions unless I consider that they are clearly wrong. Having regard to the wide view taken in relation to the concept of “[p]enalties… in respect of an offence against a law” in Mathers I am of the view that these decisions are correct for the reasons given therein, that penalties under the Act would not be provable debts in Mr Nielsen’s bankruptcy and that s.58(3) of the Bankruptcy Act is therefore inapplicable and no bar to the Applicants taking further steps in these proceedings to seek the imposition of penalties on Mr Nielsen in relation to his contraventions of the Act.
For the sake of completeness, and in the absence of any contradictor, I note that if, contrary to my view, leave to proceed is required under s.58(3) of the Bankruptcy Act, I would grant such leave to the Applicants to take fresh steps in these proceedings having regard to the principles considered in SBA Music and in Health Services Union v Jackson. I bear in mind that the discretion conferred on the Court by s.58(3) is unfettered (see HSU v Jackson at [17]). The application for penalties was ready for trial at the time Mr Nielsen was made bankrupt. The application for penalties is connected to and based on the evidence considered in my judgment as to liability. These proceedings were commenced some considerable time ago. They are now ready for hearing as to penalty. In these circumstances I am of the view that it is preferable that this Court resolve the issues in full. Mr Nielsen’s trustee in bankruptcy has been informed of the proceedings, but has not sought to be heard. There is no suggestion that the Applicants are seeking to gain some advantage over Mr Nielsen’s creditors.
I also note that the fact that Mr Nielsen is bankrupt does not result in an automatic stay of these proceedings under the Bankruptcy Act. There is no application before the Court for such a stay and nothing to indicate that a stay under s.60 of the Bankruptcy Act would be appropriate.
Relevant factors in determining penalty
A convenient, albeit non-exhaustive, list of factors that the Court might take into account in determining penalty was identified in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [24]-[59] (also see Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]). I have had regard to that checklist and also, more generally, to all the circumstances of this case, in determining the application for penalties.
First, insofar as it initially appeared to be suggested for the Applicants that Mr Nielsen had contravened five civil remedy provisions, as later conceded, the effect of my judgment in CFMEU v RGN and the declarations I made is that Mr Nielsen contravened three provisions of the Act, which are all civil remedy provisions, namely, ss.45, 50 and 323. However there were five distinct contraventions. Four of these contraventions involved a failure to pay employee entitlements arising in different ways to the Second and Third Applicants on termination of their employment by RGN. In addition, there was a failure to credit Mr Boyling with the requisite amount of personal/carer’s leave which occurred proximate to his dismissal. The circumstances in which this conduct took place are discussed at length in CFMEU v RGN. The contraventions occurred around the time that RGN ceased to perform secondary support work at the Angus Place mine where Mr Brett and Mr Boyling worked for RGN. Their employment was terminated in circumstances where their entitlements were not met.
The relevant entitlements of Mr Boyling arose under his contract and the applicable Award. They related to the extent of notice of termination or payment in lieu thereof, redundancy pay, accumulated personal leave and payment in respect of untaken personal leave on termination of his employment. The financial loss suffered by Mr Boyling was relatively significant, the total amount owed to him being $55,861.01. The failure to pay him this amount on termination occurred at a time that he could least afford it, having been made redundant. There is evidence from him (in his affidavit of 26 September 2016) that this resulted in hardship for him and his family.
Mr Brett was underpaid his entitlement under the applicable Enterprise Agreement to a specified period of notice of termination or payment in lieu therefo. The financial loss suffered by Mr Brett was more limited. It was nonetheless an amount of $1,393.12 which was equivalent to one week’s additional pay.
There is no evidence of any payment to either Mr Brett or Mr Boyling of any part of the amounts ordered to be paid on 5 July 2017 (which was before Mr Nielsen was made bankrupt).
There is no evidence of any previous findings by any court that Mr Nielsen has contravened or been involved in a contravention of Commonwealth workplace laws. However in this case he has been found to be involved in contraventions by RGN and hence to have contravened the Act in five respects. While these contraventions all related to payments to which the Second and Third Applicants were entitled, they are nonetheless distinct contraventions of different obligations (albeit that two of the contraventions relate to Mr Boyling’s entitlement to personal leave).
As attested to by Graeme Keith Osborne on 23 September 2016, the business enterprise involved was RGN. As discussed in CFMEU v RGN at [132]-[149] Mr Nielsen was the sole director and controlling mind of RGN. RGN was not a small business. It was a labour hire company which supplied labour to supplement a mine operator’s workforce. It was responsible for providing secondary support services to the Angus Place Mine operator. In order to provide such services, the employment of persons including Mr Boyling and Mr Brett, was arranged. The evidence is that at its peak RGN employed about 80 to 90 mine workers. It is now in liquidation. As indicated, Mr Nielsen did not participate in these proceedings. Hence there is no evidence before the Court as to the circumstances that led to RGN’s liquidation or as to Mr Nielsen’s personal circumstances beyond the fact of his recent bankruptcy and that the petitioning creditor was the Deputy Commissioner of Taxation.
In CFMEU v RGN I found (at [149]) that it could be inferred from all the circumstances that Mr Nielsen was an intentional participant in the conduct amounting to contraventions with knowledge of the entitlements RGN afforded to Mr Boyling and Mr Brett. He was the controlling mind, the person who negotiated terms and conditions, and therefore had knowledge of what those terms and conditions were. He made the decisions as to whether or not to pay particular employee entitlements and was the person ultimately responsible for resolving employment issues on behalf of RGN. He signed the letters of termination for both Mr Boyling and Mr Brett. There was also evidence before the Court as to Mr Nielsen’s primary involvement in relation to negotiation of an enterprise agreement and employment-related matters on behalf of RGN. He had knowledge of the essential elements constituting the contraventions and in this sense was an intentional participant such as to be knowingly concerned in the contraventions within s.550(2)(c) of the Act.
Senior management was involved in the breaches. Mr Nielsen was the sole director, majority shareholder and controlling mind of RGN. He made all significant decisions on behalf of RGN. I do not consider it appropriate to make a finding that the breaches were deliberate in any broader sense, given that there was no participation in these proceedings by Mr Nielsen. However his role in determining the entitlements of Mr Boyling and Mr Brett, seen in light of his awareness of the provisions of the applicable Award and Enterprise Agreement and the contracts of employment, as well as his broader role in relation to employment issues and determination and rectification of industrial issues for RGN, is such that the nature of these contraventions warrants the imposition of significant penalties.
Mr Nielsen has not expressed any contrition for his conduct. While on 1 February 2016 (prior to this application being filed), Mr Nielsen appeared to have accepted in correspondence with representatives of CFMEU that entitlements were owed to Mr Boyling and Mr Brett (see CFMEU v RGN at [145]), he has failed to take any corrective action. There has been no co-operation by Mr Nielsen in resolving this issue. Moreover, despite having been personally served more than once, Mr Nielsen has not complied with any orders of this Court, whether to file documents or otherwise, and has not attended the proceedings on any occasion. As the Applicants submitted, it appears that Mr Nielsen has approached these proceedings with flagrant contempt. There is nothing from him to the contrary.
In these circumstances, significant penalties are appropriate to mark the Court’s disapproval of the lack of any contrition, corrective action and/or co-operation on the part of Mr Nielsen.
Furthermore, I bear in mind the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements, as considered in Fair Work Ombudsman v EA Fuller & Sons Pty Ltd & Anor [2013] FCCA 5 at [101]-[104].
As to the need for deterrence, there is evidence before the Court in Mr Osborne’s affidavit of 23 September 2016 that immediately after RGN ceased to perform work at the Springvale Mine, Mr Nielsen simply carried on business at that mine through a different company and that, at the very least, he was involved in the management of affairs of that different company. These circumstances suggest that notwithstanding the liquidation of RGN, there is a clear and pressing need for specific deterrence, as considered in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170 at [37] per Gray J. Mr Nielsen is now bankrupt, but the circumstances of his bankruptcy are unknown. It is possible that he may be in business in the future (whether directly or through a corporation) in circumstances in which he has responsibility in relation to employee entitlements.
In relation to general deterrence, the penalty should be imposed at a meaningful level to deter others from committing similar contraventions and to send an appropriate message to the community that employees must be provided with their correct entitlements (see Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65 at [93]).
For these reasons, I accept that, as contended for by the Applicants, the penalties to be imposed on Mr Nielsen should be significant, albeit that they should not be oppressive or crushing in the sense considered in Ponzio at [93]. Mr Nielsen’s decision not to participate in these proceedings means that it is difficult to make any meaningful determination as to whether any particular level of penalty would be oppressive or crushing to him, albeit that there is now evidence of the fact of his bankruptcy.
The maximum penalty that could be imposed on Mr Nielsen for each contravention is 60 penalty units (see ss.546(2)(a) and 539(2) of the Act). The Applicants have calculated that as the contraventions occurred prior to the commencement of the Crimes Amendment (Penalty Unit) Act 2017 (Cth), the value of each penalty unit is $180 (see item 3 of Schedule 1 to the Crimes Amendment (Penalty Unit) Act 2017), so that the maximum penalty for each contravention is $10,800. No submissions were made as to any suggested “range” of appropriate penalties beyond the submission that the penalties should be significant, while not being oppressive or crushing.
I have borne in mind all of the circumstances, including, significantly, the absence of any contrition, co-operation or rectification, as well as the nature and extent of and circumstances of the contraventions and the fact of Mr Nielsen’s bankruptcy. The contraventions relate to employment entitlements of two employees, largely termination entitlements. Two of the contraventions relate to Mr Boyling’s personal leave, but are conceptually distinct. I bear in mind that the liability for the penalties would survive Mr Nielsen’s bankruptcy. These underpayments were not insignificant, although not ongoing. They occurred on or in proximity to termination of the employment of the employees. Considered individually, a penalty in the order of 50 per cent of the maximum would be appropriate in relation to each contravention. Five penalties of $5,400 would result in total penalties of $27,000.
I have had regard to the totality principle and the need not to impose an aggregate penalty that would be crushing or oppressive. On the evidence before the Court, I am satisfied that there should be some adjustment in accordance with the totality principle, on the basis that the aggregate penalty would be crushing in circumstances where Mr Nielsen has been made bankrupt on a creditor’s petition. The contraventions are significant, but are not the worst imaginable. Mr Boyling was underpaid in lieu of notice of termination. He was not paid any of the additional redundancy pay to which he was entitled under the applicable Award. He was not credited with personal/carer’s leave on the anniversary of his employment before his employment was terminated and was not paid in respect of accrued personal leave on his retrenchment as was provided for in the Award. Mr Brett was paid four weeks’ pay in lieu of notice, but was entitled to five weeks’ pay in that respect and hence was underpaid under the applicable Enterprise Agreement.
In all the circumstances, including the probable financial circumstances of Mr Nielsen and the fact that any penalty would not be a provable debt and would remain payable after bankruptcy, I consider that in accordance with the totality principle and the need not to impose an aggregate penalty that would be crushing, a total penalty of 35% of the maximum (that is, $18,900) would be appropriate.
It was submitted that pursuant to s.546(3)(b) of the Act, any penalties should be paid to the CFMEU (the First Applicant which conducted this case) rather than to Consolidated Revenue. In the particular circumstances of this case, I consider that this is appropriate (see Gibbs v Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216; [1992] FCA 553 at [26] and Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 at [22]-[28]). The CFMEU initiated these proceedings to protect the legitimate interests of its members in receiving their employee entitlements. There is nothing to suggest that such an order would result in a windfall to the CFMEU beyond its costs and expenses, including staff time (see CPSU v Telstra).
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Associate:
Date: 5 February 2018
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