Collison v Brighton Road Enterprises Pty Ltd T/A the Grosvenor Hotel and Anor (No.2)
[2016] FCCA 1798
•15 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COLLISON v BRIGHTON ROAD ENTERPRISES PTY LTD T/A THE GROSVENOR HOTEL & ANOR (NO.2) | [2016] FCCA 1798 |
| Catchwords: INDUSTRIAL LAW – Whether any and what amount of compensation should be Ordered for any loss suffered by the Applicant, because of the Respondents’ contravention of s.340 of the Fair Work Act 2009 (Cth) – whether any and what amount of pecuniary penalty should be Ordered for said contraventions – whether penalties should be paid to Applicant. |
| Legislation: Australian Human Rights Commission Act 1986, s.46PO(4)(d) Crimes Act 1914, s.4AA(1) Fair Work Act 2009, ss.340, 539, 545, 546, 557, Pt.3.1 Industrial Relations Act 1988 (Cth), s.170EE |
| Cases cited: Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Collison v Brighton Road Enterprises Pty Ltd & Anor [2016] FCCA 186 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Ors [2015] HCA 46 |
| Applicant: | JEMMA COLLISON |
| First Respondent: | BRIGHTON ROAD ENTERPRISES PTY LTD T/A THE GROSVENOR HOTEL |
| Second Respondent: | RABIH YANNI |
| File Number: | MLG 1922 of 2014 |
| Judgment of: | Judge Jones |
| Hearing date: | 12 May 2016 |
| Date of Last Submission: | 18 May 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 15 July 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fetter |
| Solicitors for the Applicant: | DST Legal |
| Counsel for the Respondents: | Mr Solomon-Bridge |
| Solicitors for the Respondents: | Holding Redlich |
ORDERS
The parties shall draw up minutes reflecting the Court’s decision in the judgment, with respect to an Order under s.545(2)(b) of the Fair Work Act 2009 (Cth) (“the Act”).
Pursuant to s.546 of the Act:
(a)Brighton Road Enterprises Pty Ltd as Trustee of the J Bernard Cabral Family Trust, the Pierre Cabral Family Trust and the Sebastian Catalfamo Trading Trust pay the Applicant an amount of $35,000.00 within 60 days of these Orders; and
(b)the Second Respondent pay the Applicant an amount of $7,000.00 within 60 days of these Orders.
The matter is listed for Directions on 19 September 2016 at 2:15pm so far as Order 1 is concerned.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1922 of 2014
| JEMMA COLLISON |
Applicant
And
| BRIGHTON ROAD ENTERPRISES PTY LTD T/A THE GROSVENOR HOTEL |
First Respondent
And
| RABIH YANNI |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for compensation pursuant to s.545(2)(b) of the Fair Work Act 2009 (Cth) (“Act”) and for pecuniary penalties pursuant to s.546 of the Act, in relation to contraventions declared by this Court of the General Protection Provisions of the Act (Pt.3.1 of the Act) in Collison v Brighton Road Enterprises Pty Ltd & Anor [2016] FCCA 186 (“Liability Judgment”).
At the hearing, the parties relied on the evidence given during the hearings leading to the Liability Judgment. In addition, the Applicant, by consent, filed an affidavit “updating” her position since September 2015. She was briefly cross-examined on these matters.
Compensation
Section s.545(2)(b) of the Act provides that the Court may make “an order awarding compensation for loss that a person has suffered because of the contravention”. There must, therefore, be “an appropriate causal connection between the contravention and the loss claimed”: see Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526 at 592.
In Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1, Lee J considered a predecessor of s.545(2)(b) of the Act (s.170EE of the Industrial Relations Act 1988 (Cth)). His honour said (at [9]) that:
· “In assessing the compensation that is appropriate the Court will have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened… The Court will consider the detriment occasioned to the employee by the employer’s contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences.”
Economic Compensation
Although the award of compensation under s.545(2)(b) of the Act is a statutory entitlement, the usual approach to the calculation of economic compensation under s.545(2)(b) of the Act is, so far as a monetary amount can achieve, to place the employee in the position he or she would have been in, if the employer had not contravened the Act. This reflects the settled principles identified in Haines v Bendall (1991) 172 CLR 60, regarding damages for actions in tort or contract. In simple terms, in circumstances where an employee has been terminated, this involves, having regard to the totality of the evidence, an assessment of how long the employee would have remained in that employment and the determination of the value of the likely income stream, followed by the application of the discount for contingencies and vicissitudes. The discounted income stream is then reduced by the employee’s mitigated loss (his or her actual earnings since the dismissal). The Court may consider whether the employee has taken appropriate steps to mitigate his or her loss. However, it is for the employer to establish the facts going to the employee’s alleged failure to mitigate his or her loss: Harding v Harding (1928) 29 SR (NSW) 96 at 106; Tasman Capital v Sinclair Pty Ltd 75 NSWLR 1 at [55]-[72]; and Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR (NSW) 421 at 430.
As there must be a causal connection between the contravention and the loss suffered, it is appropriate to set out the contraventions found by the Court in the Liability Judgment. These are contained in the declarations made as follows:
a)In deciding to terminate the Applicant’s employment, the First Respondent contravened s.340 of the Fair Work Act 2009 (Cth) (the Act) by injuring the Applicant in her employment, for the reason that, or for reasons which included as a substantial and operative reason that, the Applicant was entitled to personal leave under the Act.
b)In deciding to terminate the Applicant’s employment, the First Respondent contravened s.340 of the Act, by altering her position to her prejudice, for the reason that, or for reasons which included as a substantial and operative reason that, the Applicant was entitled to the benefit of the Accident Compensation Act 1985 (Vic).
c)Pursuant to s.550 of the Act, the Second Respondent is taken to have contravened the Act as set out in Declarations (1) and (2).
The Applicant’s claims for economic compensation in her Outline of Applicant’s Submissions on Remedy filed on 2 May 2016 follow the approach set out at [5] above, save to say that, because she asserts the amount of tax she will pay on any lump-sum compensation awarded may be higher than the marginal tax rate she would have paid had that money been earned as wages on a periodic basis, she argues a fairer methodology is to calculate the net losses and then “gross up” to cancel out this effect: Martin v Tasmania Development and Resources (1999) 89 IR 98 and Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405.[1]
[1] Outline of Applicant’s Submissions on Remedy filed on 2 May 2016 at [8] to [15].
The Applicant claims that, having regard to the evidence at trial, she would have been, but for the contraventions, employed for a further two years.
The Applicant submits that it can be inferred from the Second Respondent’s evidence that he was happy with the Applicant and that they had a good working relationship. She argues that as Events Manager at the Grosvenor Hotel, she had a senior role in the business and the Second Respondent, who had just taken over was trying to grow the business. In this context the role as Events Manager would be critical for him. Given the Applicant had the experience, knew how the place worked and had a good relationships with other staff members, there was no reason to think that, from the Second Respondent’s point of view, she would not have had a strong future.
The Applicant submits that, from her perspective, there was no reason to think that she would have resigned. She supported her brother financially and emotionally during this period and was earning a good wage at the Grosvenor Hotel, which would not have been easily replaced by going elsewhere. The Applicant’s evidence was that it was her understanding that she would be promoted. From her point of view, there was no reason to think that she would have left. As to the sexual harassment she said she had endured from Mr Catalfamo, the Applicant submits that he had just sold the business to Mr Yanni, and so there was some hope that he would be on his way out of the premises. Her fundamental submission is that it is not open to the Respondents to defend a claim for compensation by pointing to the sexual harassment by Mr Catalfamo, which she suffered, because, at the end of the day, it is their duty to protect their employee from that sort of conduct.
As her salary with the First Respondent was $60,225.00 per annum, her loss valued on the basis of gross remuneration is $120,450.00.
No discount is applied by the Applicant for contingencies or vicissitudes. Adding together the notice she received ($1,056.00) and her earnings until she ceased her casual employment in or around March 2016, because of her incapacity to work, results in a total amount of $19,806, to be offset against the amount of $120,450.00. There is no dispute that the Applicant is now in receipt of a Centrelink Disability Support Pension (“DSP”) (made retrospective from 30 September 2015) (Exhibit A14). The Applicant argues the DSP payments received by her should not be taken into account: Redding v Lee (1983) 151 CLR 117 (“Redding”). Consequently, the Applicant submits that her total economic loss is $100,644.00. Applying the methodology whereby the Applicant’s net losses are adjusted to remove the effect of a higher tax rate on the lump sum, the Applicant argues the Order for economic compensation should be $109,000.00.
Counsel for the Respondents submitted that the Court should adopt the approach set out by Justice Bromberg in Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430 (“Rakic”), where his Honour stated at [227] to [228]:
· [227] … The better approach is to make a finding as to the most-likely outcome in the counterfactual hypothetical, and then to adjust it to account for other possibilities.
· [228] The matters that require findings are these. First, but for Johns Lyng’s conduct, when and for what remuneration would Ms Rakic have left employment with Pattersons? Second, what is likely to be Ms Rakic’s remuneration after the date of hearing?
The Respondents submit that the Court should first determine a reasonable assumption about the length of time of service the Applicant would have had at the Grosvenor Hotel: Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 (“MUA decision”) at [140] and then determine the most likely outcome based on the counterfactual hypothesis as argued by the Respondents.
The Respondents submit, by reference to extracts from transcript, that the Applicant’s own evidence is that she would not have lasted a year at the Grosvenor Hotel. They argue that the probability is that the Applicant would not have returned from her sick leave. The following sets out the relevant extracts from transcript relied on by the Respondents in the Respondents’ Submissions on Relief and Penalties filed on 2 May 2016 at [6] to [7]:
· 6. Indeed, the probability is that she would not have returned at all from her sick leave. So much is apparent from:
(a) her description of the work environment as “sexually hostile” (T31.41) and “bullying” (T35.39);
(b) her claimed exposure to “relentless sexual harassment” (T30.43) and “ongoing sexual assaults” (T27.36);
(c) her opinion that the Second Respondent “had it in for [her]” (T35.36);
(d) the fact she was then already on sick leave as a result of an anxiety condition that related to those circumstances;
(e) her psychologist’s then opinion to the effect that she should not return to work (which the Applicant conceded she “took into account”) (T36.3-.4); and
(f) the Applicant’s email of 22 August 2014 to the Second Respondent stating she could not say when she might return to work ([42]).
· 7. In her evidence in chief, the Applicant described the time before her dismissal as follows (T22.31-.38):
· And on the Saturday, the 16th, how were you feeling? ---As soon as I had left that day, I was beside myself. I had already been suffering from, sort of, some anxiety and stress related to a lot of other things that were happening in that work environment that, obviously, aren’t to do with this, but it’s a much longer story than what this is. I had tried to make an appointment with my doctor who was unwell himself at that point, so I went to see another doctor just to get some advice on how to manage my anxiety at that level. I was really struggling. And, you know, that resulted in taking time.
The Respondents also argue that the Applicant’s claim should be heavily discounted to allow for the probability she would not have returned to work at all or, if she had, the return would have been only for a short time. The Respondents argue the discount also needs to reflect other possibilities, such as the Applicant getting a new job elsewhere, or being legitimately dismissed, because of absenteeism related to her psychological condition and consequent sick leave[2].
[2] Respondents’ Submissions on Relief and Penalties filed on 2 May 2016 at [9].
In addition, Counsel for the Respondents referred to a finding made in the Liability Judgment that the Applicant and Second Respondent had lost trust and confidence in each other and that the breakdown was insurmountable (at [132]).
Taking these factors into account, the Respondents argue the likely outcome is that the Applicant would never have gone back to work. Alternatively, it is submitted that, at best, she would have, likely returned from her sick leave and remained working for a month.
The Respondents claim correctly that a discount is to be applied to the gross earnings calculated, before subtracting actual income earned: MUA decision at [127].
The Respondents argue that the Applicant’s claim to have mitigated her loss ought not be accepted. It is argued that it is simply not credible given her expenses (living and legal expenses) that she only earned $12,000.00 between termination and the trial and $6,750.00 up to these proceedings. It is submitted that the Applicant has failed to discover, during trial and up until these proceedings, all her payment slips and relevant income tax returns. The Respondents argue that any mitigation for loss should be increased taking into account this consideration. The Respondents submit that this failure must be taken into account in determining the value of the economic loss suffered by the Applicant.
The Respondents submit that the decision in Redding and the authorities cited therein, are to be distinguished from this matter, as they are concerned with the tortfeasor’s wrong, causing the person to go onto the relevant pension, whether it is a worker’s compensation claim made after the injury at work, or an unemployment claim made after the dismissal. In this matter, the Respondents assert that the Applicant has failed to establish a causal relationship between the contraventions and her receipt of the DSP. The Respondents refer to that part of the judgment of Gibbs CJ where his Honour says at p.125:
· “The conclusion that the benefit is intended for the plaintiff personally and not in reduction of the damages may more readily be drawn when it is seen that the receipt of the benefit is not dependent on the loss of wages or earning capacity…”
The Respondents submit, that it may be inferred that, in this matter, the receipt of the DSP arises out of the Applicant’s incapacity for work and is consequently not of the type of personal benefit, the subject of Redding.
The Respondents do not support the use of the “grossed up” method of calculating any actual amount of economic loss.
Non-Economic Loss
The Applicant claims that, having regard to her evidence about the sadness, stress and worry the dismissal caused, the fact that she has been diagnosed with depression and anxiety and the medication she is taking for those illnesses, it may be concluded that her symptoms have both continued and worsened from the time of the trial.
At trial the Applicant gave the following evidence relevant to this aspect of her loss claimed:
· “And on the Saturday, the 16th (August 2014), how were you feeling?‑‑‑As soon as I had left that day, I was beside myself. I had already been suffering from, sort of, some anxiety and stress related to a lot of other things that were happening in that work environment that, obviously, aren’t to do with this, but it’s a much longer story than what this is. I had tried to make an appointment with my doctor who was unwell himself at that point, so I went to see another doctor just to get some advice on how to manage my anxiety at that level. I was really struggling. And, you know, that resulted in taking time.” (T22.30)
· And how did that make you feel in the following days and weeks?‑‑‑Well, up until now, it’s still horrible. I had – I had left two jobs prior. I had been with one job for about 10 years and the other job for about three years, and this was a combination of the two jobs and exactly where I wanted to – to be. Nick had some – some great parts to him. The Catalfamos were a well-known family, and Rabih being part of it, I – it seemed like it would be a great learning experience. The environment that it turned out to be was very different and a very sexually hostile and man-dominated environment, and I was devastated that I’d lost two great jobs that – that I had had prior and – and ended up with no job and a child to support and myself to support, and I had tried the best that I could to – to make that situation work. I really didn’t want to just – I had no – there was no benefit to me just leaving a job and – and not having any income. It had a – an effect that is profound on me to – to now, to this day, that I – I’m still not entirely sure if I was ever really hired because I was good at what I was doing or – or what had happened, but there was a systematic chain of events that had happened that – that resulted in me losing my job and – and really in a – in a tough sort of situation. If I could have taken it back and – and just gone back to how things were, which is how those emails read, that would have been fine, but that wasn’t the case, and I knew that wasn’t the case, and it left me in a very tough situation, because it’s not just me that I’m looking after. I’m responsible for another person as well. So it – it has had a – a huge effect on my life.
· Can I ask you just to be very specific when you talk about the effects on you. I mean, what signs or symptoms have you had of the ‑ ‑ ‑?‑‑‑I’ve got really chronic anxiety and depression at the moment. My current psychiatrist has advised – I’m – I’m just doing some casual event management work. It’s not full time. She has advised that I apply for a disability pension at this point, which is devastating at 34, to think that I’m not mentally capable of being able to work properly, but my anxiety is crippling.
· What are your symptoms?‑‑‑I don’t sleep very well at all. I have heart palpitations, and I’m just depressed. I’m lethargic. I’m – I find it very difficult even just to leave the house to do the most basic of things, which probably sounds like a huge effect from something that might not seem so big, but for me, it really was, because this was what I thought was going to be my career, and it didn’t – it didn’t work that way, and then I was so disappointed in – in what had happened, and I felt irresponsible that I didn’t just put up with it, but I couldn't. I just physically couldn't take it any more. So, yes, it had a – a chain of effects that still – to this day – I’m still seeing a psychiatrist at the moment. I’m on quite a lot of medication. (T31.35 – 32.25)
· And he goes on to say he needs details from a doctor as to your capacity and prognosis and asks you to let him speak to your doctor. Just pausing there. Why didn’t you let him speak to your doctor?---Doctor – my doctor is aware of what had triggered most of my anxiety to do with work, which was some ongoing sexual assaults and sexual harassment in the workplace. I was under the impression when Rabih took over that it would actually only just be him that was working there and that the Catalfamos wouldn’t have anything to do with it anymore. That’s not how it turned out at all and they were both still in attendance. That paired with Rabih and the way that he had been treating me, I could just – I was really concerned about what was going to happen. I didn’t necessarily want Rabih reading a whole lot or knowing a whole lot about my issues with the sexual harassment because I didn’t know how to move forward with it at that point. And it was personal. I just – it was really affecting me and I wasn’t sure how that would be used or – you know, it was really – it was a difficult thing to deal with at that point. (T27.32 – 27.45)
In these proceedings the Applicant filed an affidavit in which she relevantly said:[3]
· 4. After the hearing I continued working casually at Rah Bar, earning about $250 per week. I continued seeing my psychiatrist, Dr Tzolova, and taking my medication : anti-anxiety medication (Xanax and Valium), and anti-depressant (Zoloft) and a drug to help with my insomnia (Seraquil). I continued caring for my little brother, who still lives with me.
· 5. I felt sad and anxious all of the time, cried a lot, had panic attacks and was not sleeping. I felt hopeless, useless and defeated as a person. I had regular suicidal thoughts.
· 6. I could not stop thinking about being sacked, about how Rabih had fought this case the whole way, about (sic) he had lied to the Court about the reasons why he sacked me, and how unfair it was that he was getting away with what he had done.
· 7. I felt better when I read the Court’s decision on 5 February 2016. However, on 25 February 2016 when I found out that the respondents were trying to appeal the decision I felt worse than ever.
· 8. About three weeks ago it all became too much. I felt I wasn’t able to continue working. I resigned from my job.
[3] Applicant’s affidavit filed on 14 April 2016.
The Applicant was cross-examined about the opinion of her psychologist, Ms Jane Weaver, whom the Applicant gave evidence had advised her that she should not return at all to the workplace. The Applicant stated that her attendance on Ms Weaver was in relation to the sexual harassment only, whereas she attended Dr Tzolova in relation to the effects of the Second Respondent’s conduct and her dismissal.
She claims her non-economic loss suffered, because of the contraventions, is $30,000.00.
The Applicant relies on a decision of the Full Court in Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82 (“Oracle”), and in particular the judgment of Kenny J. The decision concerned “damages by way of compensation for any loss or damage suffered because of the conduct of the respondent”: s.46PO(4)(d) of the Australian Human Rights Commission Act 1986. The trial judge found that an employee (the Second Respondent) of the First Respondent engaged in conduct (sexual harassment of the Applicant) contrary to the Sex Discrimination Act 1984 and that the First Respondent was vicariously liable for the employee’s unlawful conduct. The trial judge accepted the Applicant was entitled to damages, by way of compensation, for the stress she suffered, because of the Second Respondent’s unlawful conduct, and awarded her $18,000 in general damages. It is to be noted that, at trial, the judge found the Applicant suffered chronic adjustment disorder, with mixed features of anxiety and depression (at [74]). There was also medical evidence by way of diagnosis of adjustment disorder, as well as corroborative evidence of the Applicant’s distress contained in a counselling journal and on the impact on her from the Applicant’s partner and her neighbour.
The question to be determined on appeal was whether the award of $18,000 in damages was manifestly inadequate. The Respondents argued that the award of damages fell within the permissible range of general damages arising from sexual harassment cases (at [78]) and the circumstances of this case were to be distinguished from those cases where the amount awarded was significantly outside this range (at [79]).
In a lengthy judgment (with which the other members of the Court, Besanko and Perram JJ agreed), Justice Kenny traversed the history of the award of damages in sexual harassment cases, observing the caution and uncertainty inherent in those decisions. She opined that it was relevant in cases of damages for sexual harassment to have regard to the award of damages in other jurisdictions, such as tort and contract of employment, for injuries suffered which were akin to those suffered by the Applicant. At [95], her Honour stated:
· “An award of damages by way of compensation under s 46PO(4)(d) of the AHRC Act is to compensate for the injury suffered by the person harassed: see Hall v A & A Sheiban at 256 (Wilcox J), 281 (French J). In making an award, a court necessarily has regard to the general standards prevailing in the community. As indicated above, other awards of general damages for injury of the kind suffered by Ms Richardson may provide some measure of manifest inadequacy since they may provide some guidance as to what contemporary courts have discerned as proper compensation for such an injury according to generally prevailing community standards. Cases in the field of personal injury may be particularly useful because the object of an award of damages for non-pecuniary loss in such cases is much the same as an award of damages under s 46PO(4)(d) of the AHRC Act: see O’Brien v Dunsdon at 78 and Teubner v Humble [1963] HCA 11; (1963) 108 CLR 491 at 507 (Windeyer J); and Qantas Airways Ltd v Gama at [96].”
Her Honour noted, prior to considering damages awarded in tort, that, “in the context of damages for personal injury, there is reason to believe that community standards now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before”: at [96].
By reference to two decisions of the Federal Court (not being decisions concerned with anti-discrimination law): Nikolichv Goldman Sachs J B Were Services Pty Limited [2006] FCA 784 (“Nikolich”) and Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 (“Walker v Citigroup”), Justice Kenny observed that “awards have been at a higher level for loss of enjoyment of life and pain and suffering outside the anti-discrimination legislation field.” Her Honour stated at [109]:
· “Even this cursory overview of the quantum of awards historically awarded in these other fields to successful claimants in situations not wholly unlike Ms Richardson’s reveals a substantial disparity between the level of those awards and the typical compensatory damages provided to victims of sexual discrimination and harassment. Such disparity bespeaks the fact that today an award for sexual harassment, though within the accepted range for such cases, may be manifestly inadequate as compensation for the damage suffered by the victim, judged by reference to prevailing community standards.”
At [117], Justice Kenny stated:
· “Putting aside comparisons with general damages in negligence, including in connection with workplace bullying and harassment, and in other actions, it is clear that continued adherence in sex discrimination cases, including sexual harassment cases, to a ‘range’ of damages awards that has not absorbed the increases evident in awards in other fields of litigation has resulted in an award in Ms Richardson’s case that, judged by prevailing community standards, is disproportionately low having regard to the loss and damage she suffered. As noted earlier, the general range of general damages in respect of pain and suffering and loss of enjoyment of life caused by sex discrimination has scarcely altered since 2000 and does not reflect the shift in the community’s estimation of the value to be placed on these matters. The range has remained unchanged, notwithstanding that the community has generally gained a deeper appreciation of the experience of hurt and humiliation that victims of sexual harassment experience and the value of loss of enjoyment of life occasioned by mental illness or distress caused by such conduct. Indeed the range has remained fixed despite changing views of what might be “sums which are generally felt to be excessive”: Hall v A & A Sheiban at 256. In that case, in addition to cautioning against such excessive sums, Wilcox J (at 256) implored that while:
… damages for… injury to feelings, distress, humiliation and the effect on the claimant’s relationships with other people are not susceptible of mathematical calculation … [t]o ignore such items of damage simply because of the impossibility of demonstrating the correctness of any particular figure would be to visit injustice upon a complainant by failing to grant relief in respect of a proved item of damage.”
The Full Court substituted an award of $100,000.00 for the $18,000.00 general damages awarded by the trial judge.
The Respondents submit that the Applicant has failed to produce any medical evidence, which would prove that her psychological symptoms are the result of the dismissal. The Respondents state that, to the contrary, the Applicant’s own evidence was to the effect that, before her termination, she “had already been suffering from, sort of, some anxiety and stress related to a lot of other things that were happening in that work environment that, obviously, aren’t to do with this” (T22.31 - .33), and that “what had triggered most of (her) anxiety to do with work … was some ongoing sexual assaults and sexual harassment in the workplace” (T27.34 - .36).
The Respondents point out that the Applicant’s psychologist’s opinion was that the Applicant “shouldn’t return (to work) at all” (T25.41 - .42), and that “it was an extremely hostile environment and that (she) shouldn’t return to it, for (her) wellbeing” (T31.1-.2).
The Respondents submit that it may be inferred that, despite her dismissal admittedly being an inherently distressing event, her termination may well have in fact avoided further exacerbation of her psychological condition. As I said to the Respondents’ Counsel during these proceedings, I find this submission disingenuous, as it carries with it a suggestion that dismissing an employee by an employer, as a response to complaints of sexual harassment, may in some way be appropriate. This, in my view, is a nonsense.
The Respondents note that in two decisions of this Court, which they assert have some similarity to these proceedings, the amount awarded for non-economic loss was $10,000.00. The decisions referred to are Sagona v R & C Piccoli Investments Pty Ltd [2014] FCCA 875 and Lei v Chance Trading Pty Ltd [2015] FCCA 441. The Respondents argue that these decisions are to be distinguished, as in each case there was evidence directly linking the psychological symptoms to the conduct and only the conduct subject of the proceedings. They submit that in these proceedings such evidence is lacking.
Joint and Several Liability
The Applicant seeks the inclusion in any Orders made by this Court, of an Order clarifying that the Respondents are joint and severally liable for any amounts awarded.
There is no dispute that the correct name of the First Respondent is Brighton Road Enterprises Pty Ltd as trustee of the J Bernard Cabral Family Trust, the Pierre Cabral Family Trust and the Sebastian Catalfamo Trading Trust. Any Order directed at the First Respondent in this proceeding will refer to detail of its status as a corporate trustee.
Consideration
Economic loss
I am satisfied that, in determining the economic loss suffered by the Applicant, because of the contraventions, the proper approach to be adopted, given the Applicant was terminated from her employment, is that set out at [5] above.
I do not consider the approach adopted in the MUA decision and Rakic is one which commends itself in the circumstances of this matter. In each of these decisions, the Court was required to assess the loss of opportunity suffered by the particular Applicants, because of the Respondent(s) contraventions of the relevant statute. In Rakic, Justice Bromberg made it clear that the adoption of the counterfactual analysis was necessary in circumstances where there were a range of hypotheticals that could apply in respect of the Applicant’s loss of opportunity. In these proceedings, the loss of opportunity does not arise, nor are there a range of hypotheticals to consider.
In my opinion, the relevant evidence in deciding the economic loss suffered by the Applicant, as a consequence of the contraventions, is as follows:
a)the Grosvenor Hotel was a small workplace;
b)the Applicant primarily interacted with the Second Respondent (the owner of the business);
c)the Second Respondent’s style of management was one which the Applicant found difficult to work with;
d)the Applicant struggled to discern the Second Respondent’s expectations of her;
e)her approach was to seek guidance and training from him;
f)this approach was not something the Second Respondent believed necessary. His style was one, he said, which involved pointing out to the employee the error and informing them to do what he said was appropriate;
g)the Applicant had already struggled, she says for some time, to cope with what she alleged to be sexual harassment from a former owner of the business. She looked forward to a cooperative working relationship with the Second Respondent and made it clear she was disappointed in this regard; and
h)the events on the Friday preceding the contraventions reveal, on the one hand, the extreme distress of the Applicant, given what she says was the attitude of the Second Respondent to her desire for guidance and training and, on the other hand, the Second Respondent’s lack of awareness of her distress.
Having regard to the above, I have formed the opinion, that the personalities of the Applicant and the Second Respondent (her direct boss) were completely mismatched. The following evidence given by the Applicant about the discussion between her and the Second Respondent is, in my view, revealing:
· “And how did that conversation make you feel?‑‑‑Just – I could sort of foresee what was happening and I felt stressed. And I had really tried the best I could to work with a whole new business plan that I had no training in whatsoever. I don’t know how to replicate The Points’ business within this business. And I just thought he was completely disappointed in everything that I was doing. He was continuously going to be berating me all the time about it and it was just overwhelming. It was – what I thought was going to be a really great learning experience had turned into a nightmare.” (T22.4)
· And you were asked – I think the last question was about whether you would still have been employed a year afterwards. Let me ask you this: if the business had protected you from the sexual harassment and if Mr Yanni had been able to acceptably moderate his behaviour towards you, would you have stayed in employment?‑‑‑Yes.(T57.46)
The Applicant’s evidence was that the Second Respondent had not protected her from the sexual harassment and I am satisfied that it is more than likely that the Second Respondent would not have moderated his behavior.
The Applicant said that she had given up two jobs for the position of Events Manager at the Grosvenor Hotel and was bitterly disappointed by the workplace.
I am confident that, if the contraventions had not taken place, the Applicant (who was experienced in her area of work) would have sought alternative employment at the earliest time possible. It must be recalled that the contraventions took place after the Applicant and the Second Respondent had engaged in a discussion which, on the evidence, distressed the Applicant and made her aware that the Second Respondent’s management style was not one that would assist her perform her responsibilities as Events Manager.
I am satisfied, the Applicant would have remained on sick leave for at least a further week after 25 August 2014: that is, returning to work on Monday, 1 September 2014. The reference by the Respondents to the “loss of trust and confidence” in the Liability Judgment is misplaced. In context, it is clear the loss was on the part of the Second Respondent and was a finding made in the context of the contraventions and not prior to the contraventions. I am satisfied that it is likely the Applicant would have obtained alternative employment within a period of no more than four months. From the Respondents’ point of view, there is no dispute that she was a valued employee and I am satisfied there would have been no reason for the First Respondent to terminate the Applicant’s employment before the four-month period.
Accordingly, I am satisfied that the Applicant’s loss in earnings stream, because of the contraventions, was a period of four months from 1 September 2014; that is, until 1 January 2015. Given the relatively short period of time, I am satisfied that a 5% discount should be applied to this income stream for contingencies or vicissitudes. This discount takes into account that her existing psychological symptoms may have affected her capacity to work. The Applicant’s evidence is that she commenced working on a casual basis in October 2014 for one or two nights a week and then at a venue, Rah Bar, earning $250.00 weekly. Her evidence is from October 2014 to the date of these proceedings (May 2016) she has earned $18,750.00.
I reject the Respondents’ submission that the Applicant has not proven that she has mitigated her loss. It is the Respondent who bears the evidentiary responsibility. The Respondents rely on the failure of the Applicant to discover all her payslips from Rah Bar and her personal income tax return. The Applicant’s response to the Respondents’ argument that she failed to discover her income tax return is that she did not submit one, as she did not reach the threshold required. I accept this evidence. As to the discovery of her payslips while she worked at Rah Bar, it was apparent from the cross-examination that the Applicant had provided some payslips to the Respondents. The Court was not informed which payslips were not discovered. In the circumstances, I find the Respondents have not discharged the evidentiary onus. Accordingly, I am satisfied that the Applicant has taken the appropriate steps to mitigate her loss.
The income earned by the Applicant from October 2014 until 1 January 2015 should be offset against the value of the four-month income stream she would have earned had she remained employed by the First Respondent for the period of four months, discounted by an amount of 5%.
On the evidence before the Court, I am confident I can say that her weekly gross income was $1,056.15 (Exhibit R1). Four months (16 weeks) is equivalent to $16,898.40. Discounting the value of this income stream by 5% results in an amount of $16,053.48.
The Court is presently not in a position to calculate the value of the discounted four-month income stream offset by income earned by the Applicant over the period from October 2014 until 1 January 2015. I have formed the view that, in the absence of documentary evidence of income actually earned, the fairest method to calculate the appropriate offset is as follows:
a)assume the Applicant earned $18,750.00 gross from October 2014 to the date of trial;
b)estimate the pro rata weekly income from 1 October 2014 to the date of trial; and
c)multiply this amount by a period of four months and offset the discounted four-month income stream by this amount.
In addition, the resultant figure will be requested to be offset by the payment in lieu of notice the Applicant received which was $1,056.00.
The parties will be required to draw up minutes reflecting my decision regarding the economic loss suffered by the Applicant.
Given my findings as to compensation, it is unnecessary for me to deal with the question of how the receipt of a DSP should be treated. Nor, in my view, is it necessary to address the Applicant’s claim the Court should adopt an alternative method involving a “grossed up” amount.
Non-economic loss
I first deal with the Respondents’ argument that the Applicant has failed to prove her case, because of the lack of medical evidence to support her argument that she suffered anxiety, distress, insomnia, panic attacks, loss of self-esteem and suicidal ideation. It is not necessary that there be before the Court expert medical evidence for a Court to find that an Applicant has suffered distress, anxiety or other symptoms as a consequence of contraventions engaged in by a Respondent: see Oracle at [105] referring to the decision of the Court in Walker v Citigroup.
In this case the Applicant gave unchallenged sworn evidence in the trial and in the proceedings, regarding the psychological impact of the contraventions; which included both the conduct of the Second Respondent and her dismissal. She gave evidence of the medication she was prescribed by her Psychiatrist.
The question I must determine is whether the Applicant’s psychological symptoms were caused by the contraventions in question. This question is complicated by the fact that, on the Applicant’s own evidence, she was already suffering psychological symptoms and taking medication, because of the sexual harassment she alleges the former owner of the business engaged in prior to the contraventions.
In Oracle, Kenny J said this about cases in which there may be multiple factors contributing to psychological injury (at [69] to [70]):
· 69. Further, quite apart from the appellant’s suggested application of Hall v A & A Sheiban, there is likely error in an approach which concludes without further analysis that the presence of multiple factors giving rise to a specific form of loss or damage will bar a victim of sexual harassment from recouping compensation for the part which the contravening conduct played in that loss. That discriminatory conduct which contributed (but was not the sole contributor) to the onset of injury is a loss “suffered because of the conduct of the respondent” was accepted without question by French and Jacobson JJ in Qantas Airways Ltd v Gama at [99] in the course of applying s 46PO of the AHRC Act. Such an acceptance reflects the remedial nature of s 46PO(4)(d). In reflecting on s 82(1) of the Trade Practices Act 1974(Cth), which was in its terms relevantly indistinguishable from s 46PO(4)(d), Hayne J explained in Henville v Walker at 509 [163] :
[S]eldom, if ever, will contravening conduct be the sole cause of a person suffering loss. Other factors will always be capable of identification as a cause of their loss ... What the Act directs attention to is whether the contravening conduct was a cause. It does not require, or permit, the attribution of some qualification such as “solely” or “principally” to the word “by”.
(Emphasis in original)· (See also Henville v Walker at 482-483 [68]-[72] (Gaudron J).)
· 70. In I & L Securities Pty Ltd v HTW Valuers at 130 [62] Gaudron, Gummow and Hayne JJ elaborated that:
As was recognised in Henville v Walker there may be cases where it will be possible to say that some of the damage suffered by a person following the contravention of the Act was not caused by the contravention. But because the relevant question is whether the contravention was a cause of (in the sense of materially contributed to) the loss, cases in which it will be necessary and appropriate to divide up the loss that has been suffered and attribute parts of the loss to particular causative events are likely to be rare. Further it is only in a case where it is found that the alleged contravention did not materially contribute to some part of the loss claimed that it will be useful to speak of what caused that separate part of the loss as being “independent” of the contravention.
(Emphasis in original)In this case, the Applicant was suffering anxiety, distress and taking prescribed medications before the contraventions. Her unchallenged evidence is that she was managing, nevertheless, to work until she was dismissed. I am satisfied that the conduct of the Second Respondent in terminating her employment in contravention of the Act, both prolonged and exacerbated these symptoms, with the consequence she suffers, in addition, panic attacks, loss of self-esteem and experiences moments of suicidal ideation.
I am satisfied that an award of compensation for this loss in the amount of $10,000.00 is neither derisory nor excessive and I will so Order.
Penalties
Section 546 of the Act provides:
· 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.
Section 557(1) of the Act provides that:
· Course of conduct
· (1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
These provisions do not, however, apply to contraventions of the general protection provisions of the Act: sub-s.557(2) of the Act.
Section 539(2) of the Act prescribes the following maximum penalties that may be imposed on an individual for contraventions of that Act:
· 60 penalty units for a contravention of s.340 of the Act.
A penalty unit is $170.00 (s.4AA(1)) of the Crimes Act 1914).
As the Second Respondent is a person, the maximum penalty for each contravention found by the Court is $10,200.00. Section 546(2)(b) of the Act provides that a pecuniary penalty in the case of a body corporate must not be more than five times the maximum number of penalty units referred to in s.539(2) of the Act. As the First Respondent is a body corporate, the maximum penalty for each contravention found by the Court is, therefore, $51,000.
The discretion given to the Court to Order penalties under the Act is a broad one. The Courts have, however, developed principles in relation to the approach, which is appropriate to adopt in determining any penalty to apply for civil remedy contraventions and, in addition, what is described as a convenient checklist in determining the penalty to apply for each contravention.
The authorities establish that the following principles should be taken into account in determining the question of appropriate penalty: Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33 per Buchanan J at [28].
The first step for the Court is to identify the separate contraventions involved. Each contravention of each separate obligation in the Act in relation to each employee is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona [1992] FCA 374 at [24]; McIver v Healey [2008] FCA 425 at [16].
Secondly, the Court should consider whether some or all of the contraventions arising in the first step constitute a single course of conduct, pursuant to s.557(1) of the Act. As noted earlier this subsection does not apply with respect to contraventions of the General Protection provisions of the Act.
Thirdly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty, in all the circumstances, for each contravention. The Respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the Respondents did: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [46]. The task is distinct from and in addition to the final application of the totality principle: Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [41]-[46].
Fourthly, the Court should consider an appropriate penalty in respect of each contravention, whether a single contravention, a course of conduct or a group of contraventions, having regard to all of the circumstances of the case.
Finally, having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the contravening conduct. This is known as the “totality principle”.
The matters that the Court should take into account when considering the imposition of a penalty under the Act were summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14 at [14] and has been consistently used ever since. The Court acknowledges that the summary is a convenient checklist, but does not prescribe or restrict the matters which may be taken into account, in the exercise of its discretion; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 per Gray, Graham and Buchanan JJ.
That list is as follows:
·The nature and extent of the conduct which led to the breaches.
·The circumstances in which that conduct took place.
·The nature and extent of any loss or damage sustained as a result of the breaches.
·Whether there had been similar previous conduct by the respondent.
·Whether the breaches were properly distinct or arose out of the one course of conduct.
·The size of the business enterprise involved.
·Whether or not the breaches were deliberate.
·Whether senior management was involved in the breaches.
·Whether the party committing the breach had exhibited contrition.
·Whether the party committing the breach had taken corrective action.
·Whether the party committing the breach had cooperated with the enforcement authorities;
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
·The need for specific and general deterrence.
The Applicant submits that the appropriate course is to impose an aggregate penalty at 75% of the maximum, which applied to a single contravention, namely, $38,250 against the First Respondent and $7,650 against the Second Respondent.
There are two separate contraventions with which the Court is concerned. The declarations in respect to those contraventions are set out at [6] above. I am satisfied that these contraventions arise out of a common substratum of facts, giving rise to common elements. These are that the Applicant took an initial period of sick leave. After taking an initial period of sick leave, she then informed the Second Respondent on 22 August 2014 that she would not be returning back to work on 25 August 2014, that she would provide relevant medical documentation, but could not say when she would return. On 23 August 2014 the Respondents took adverse action, that being the dismissal of the Applicant. In these circumstances, I formed the view that it is appropriate in considering what is the appropriate penalty for each of the contraventions, to take account of the almost completely overlapping factual circumstances, which formed the basis for the contraventions.
I now turn to a consideration of the appropriate penalty for the two contraventions, taking into account the commonality of the factual circumstances of these contraventions. I have had regard to the factors listed in [77] above and any other matters I have considered relevant as follows:
a)the contraventions arose from the Applicant’s advice to the Second Respondent that she was taking a further period of sick leave and the contraventions occurred over a short period of time; in fact, less than 24 hours after the Second Respondent received the advice;
b)I have found that the economic loss suffered by the Applicant was equivalent to an amount equivalent to a discounted four-month income stream, based on the salary she received at the Grosvenor Hotel, offset by actual earnings and a weeks payment in lieu that she received. I have found that her non-economic loss is $10,000.00;
c)there is no evidence that the Respondents have engaged in or have been found to have engaged in previous conduct;
d)the size of the business enterprise is small. I am satisfied that the breach here engaged in by the Second Respondent was deliberate, in the sense that he was the only person who drafted the relevant email dismissing the Applicant. It was his decision to dismiss the Applicant. As the owner of the Grosvenor Hotel, he was of course senior management;
e)there has been no expression of contrition by the Second Respondent;
f)it is not evident to me what corrective action the Second Respondent might have taken; and
g)there is, without doubt, a need to protect employees’ minimum rights to take sick leave and to have the benefit of any right under relevant workers compensation legislation.
The need for specific and general deterrence
In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Ors [2015] HCA 46, the High Court affirmed the principle that the main, if not primary, purpose of the civil penalty provisions is the public interest in promoting deterrence:
· “55. No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.””
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243, at [37] that:
· “… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur…”
In Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2) [2012] FCA 557, Marshall J observed at [29]:
· “… It is important to ensure that the protections provided by the Act to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected:…”
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65 (“Ponzio”) at [93]:
· “… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. …”
In the absence of any remorse or contrition expressed by the Respondents, as well as the desirability of setting an appropriate penalty that will act as a deterrent to others in the industry, who may be likely to act in a manner giving rise to the contraventions, the need for specific and general deterrence forms a significant factor in this decision.
Conclusion on penalties
I am satisfied, taking into account all relevant considerations that a penalty should be set at 75% in total for both contraventions. This amounts to a $7,650 penalty against the Second Respondent and a $38,250 penalty against the First Respondent.
Having determined what the award of penalty should be, I now turn to consider the totality principle. In Ponzio, Jessup J, with whom Lander J agreed, said at [145] to [146]:
· “145. For the above reasons, his Honour’s disposition of the appellant’s case under s 187AA cannot stand. That does not mean, however, that the appeal must necessarily succeed. As I have said, the trial Judge recognised that this was a case in which the totality principle should apply. His Honour said that the principle required “that in imposing penalties for numerous offences, the penalties in aggregate are just and appropriate ... .” For that proposition, his Honour relied upon CPSU v Telstra Corporation Ltd (2001) 108 IR 228, 230 [7]. In CPSU, Finkelstein J said that, in a case of multiple breaches punishable by pecuniary penalty, it would be –
... necessary to resolve upon the appropriate total penalty, dividing that penalty by the number of individual contraventions and record that amount as the penalty for each contravention, whether or not the sum produced might be regarded as an inappropriate individual penalty.
· With respect to his Honour, I do not believe this is the correct approach. The position was, in my view, correctly stated by Goldberg J in ACCC v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36, 53:
The totality principle is designed to ensure that overall an appropriate sentence or penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved: McDonald v R (1994) 48 FCR 555; 120 ALR 629. But that does not mean that a court should commence by determining an overall penalty and then dividing it among the various contraventions. Rather the totality principle involves a final overall consideration of the sum of the penalties determined. In Mill v R (1988) 166 CLR 59; 83 ALR 1 the High Court accepted the following statement as correctly describing the totality principle:
The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is “just and appropriate”. The principle has been stated many times in various forms: “when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong”; “when ... cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences”.
As Spender J pointed out in McDonald v R at FCR 556; ALR 631:
Implicit in that statement is that the sentence for each offence should be “properly calculated in relation to the offence for which it is imposed.”
It is explicit in this statement that a sentencer or penalty fixer must, as an initial step, impose a penalty appropriate for each contravention and then as a check, at the end of the process, consider whether the aggregate is appropriate for the total contravening conduct involved: McDonald v R at FCR 563, per Burchett and Higgins JJ.
· The position as stated in Mill, on which Goldberg J relied, was described by Gummow, Callinan and Heydon JJ as the “orthodox, but not necessarily immutable, practice” in Johnson v The Queen [2004] HCA 15; [2004] 205 ALR 346, [26].
· 146. In a setting which did not involve an agreement on penalty, it would, therefore, be necessary to commence with an assessment of an appropriate penalty for each contravention, paying due regard to such mitigating factors as there were. In the judgments to which the trial Judge referred, it seems to have been accepted that, absent strong mitigating circumstances such as sheer inadvertence, a penalty of about $200 for each contravention of s 187AA on the facts existing on 5 and 6 August 2003 could not be regarded as excessive. On the facts of the present case, and having regard to what I have described as the conventional mitigating circumstances referred to by his Honour, I do not think that a penalty of $200 for a single contravention would have been excessive. It may not have been the penalty that I would have imposed, but on no view might it have been regarded as outside the permissible range. If that penalty had been imposed for each of the contraventions which came before his Honour, a total of $20,200 would be the aggregate result. Manifestly the application of the totality principle was then required.”
Standing back, in considering all the circumstances, I am satisfied that a just and appropriate penalty is $7,000 against the Second Respondent and $35,000.00 against the First Respondent.
The Respondents argue that the Court should adopt the approach of Justice Mortimer in Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338 where, at [76], her Honour said:
· I dealt with the authorities about payment of penalties, and the underlying rationales concerning common informers, in Dafallah v Fair Work Commission(2014) 225 FCR 559; [2014] FCA 328 at [139]- [143], and I need not repeat those passages. In those paragraphs, amongst other observations, I respectfully agreed with the remarks of Greenwood J in McIlwain v Ramsey Food Packaging Pty Ltd (No 4)(2006) 158 IR 181; [2006] FCA 1302 at [108] (endorsed by Branson and Lander JJ in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union(2008) 171 FCR 357; [2008] FCAFC 170 at [70]):
the imposition of a penalty under the Act is designed fundamentally to serve the public interest in acting as a deterrent to the particular Respondents and others generally from engaging in conduct of the kind the subject of the findings. In circumstances where an order has been made for compensation for both economic loss and a non-economic component concerning the disturbance, dislocation and loss of secure employment suffered by the individuals, there seems to be no good policy reason why the individuals should additionally have the benefit of an order for the payment to them of the penalty.”
Her Honour determined that the penalty should be paid into consolidated revenue. Her Honour’s reasoning is set out at [93]:
· In my opinion, to order that the sums of money imposed by way of penalty on the respondent be paid to the applicant would to be to deliver to him a windfall which would not be appropriate in the circumstances, and would not serve the interests of the administration of justice. He would receive more in real terms through the penalty payment than I determined he was entitled to by way of compensation, yet would receive that $45,000 in addition to receiving payment from the respondent by way of compensation. The inherent requirement in the compensation provisions of the Fair Work Act that a person seeking compensation prove the loss he or she alleges he or she has suffered, and otherwise prove to the satisfaction of the Court the entitlement to the remedy sought (e.g., reinstatement) would be undermined, as would the legislative policy behind s 570(1).
· (my emphasis)
This approach was rejected by a Full Court on appeal: Sayed vConstruction, Forestry, Mining and Energy Union [2016] FCAFC 4.
Referring to the judgment of Branson and Lander JJ in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (supra), the Full Court said at [90]:
· But their Honours refrained from expressing a concluded view on whether, in a case in which it would otherwise be appropriate for the “usual order” to be made, such an order should not be made if it would be likely to result in a windfall to an applicant (in the sense they had described it). In other words, their Honours refrained from deciding the issue that apparently now arises for consideration in this appeal.
The Full Court then considered the judgement of Gray J in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (supra) and concluded as follows at [97] to [107]:
· 97. Gray J added, at [45], that the notion that the penalty was designed to compensate for the costs of the proceeding has in turn led to the notion that the Court should avoid ordering a payment which would produce a “windfall” to the initiating party, referring to what was said by Finkelstein J in the CPSUv Telstra case. He also referred to what French J (as his Honour then was) said in Municipal Officers Association of Australia v City of Bayswater(1987) 22 IR 45 at 51, in referring to s 120 of the 1904 Act (as amended in 1956):
I have not been persuaded that there is any reason that this penalty ought to be paid to the applicants. The applicants’ interests in respect of these particular redundancies have not been seriously affected. There is no suggestion that the employees concerned have been in any way under compensated for the redundancies to which they have been subjected.
· 98. Gray J considered that French J was in error in seeing the purpose of the order as compensatory. Gray J added that the passage he had previously cited from Seymour contained a refutation of that proposition and provided no support for the proposition that proceedings for pecuniary penalties are not to be used for profit. His Honour added that, “[t]he question of profit simply did not arise”.
· 99. Gray J concluded:
The notion that the order to pay a penalty to the initiating party could produce a windfall is a false notion. If the true purpose of such an order is taken into account, and the order is not regarded as compensatory in any way, any notion of a windfall disappears.
· 100. We respectfully agree.
· 101. Given the legislative history of ss 539(2) and 546(3) of the FW Act, since the enactment of ss 44 and 45 in the pioneering 1904 Act, and the manner in which the “usual order” was articulated in such early cases as the Vehicle Builders’ Employees’ Federation case and Seymour, which is reflected in the Explanatory Memorandum, we consider that the power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. We accept that there may be cases (of which this is not one) where the penalty, or a part of the penalty, should be paid to another person in the circumstances described by Gray J in Plancor at [44] (as set out at [96] above).
· 102. The examples given in the Explanatory Memorandum and by Gray J in Gibbs as to when a payment (or a part payment) might be made to a particular person support the view that, depending on the factual circumstances of a particular case, a particular person for whose benefit, in effect, the contravention proceeding was brought may be the beneficiary of a s 546(3) order in the types of cases there referred to.
· 103. However, the circumstance that a beneficiary of such an order is no longer “out of pocket” (to use the language of the Explanatory Memorandum) does not, in our view, support the articulation of a principle that a successful applicant is only entitled to such an order if they can demonstrate they have incurred costs, not being legal costs within s 570 of the FW Act; or where they can show that if the penalty is paid to them they would not receive a “windfall” — however that term should properly be understood.
· 104. In our view, the legislative history of s 546(3), older authority and the terms of the Explanatory Memorandum show that no immediate or obvious connection was intended to be drawn between the exercise of the s 546(3) power and the exercise of the power under s 545 of the FW Act to order compensation.
· 105. Moreover, s 546(5) makes it plain the Court may make a pecuniary penalty order in addition to a s 545 order. The fact that a compensation order has also been made should not control the exercise of the s 546(3) power with respect to the payment of the penalty.
· 106. There is no necessary tension, as the primary judge put it, between the application of the “usual order”, where a person affected by the contravention succeeds in a court proceeding and a penalty is imposed, and the separate entitlement of that person to be compensated under s 545. Nor is there any necessary relationship between the s 570 limitation on the recovery of legal costs in proceedings under the FW Act, except in prescribed circumstances, and the application of the “usual order”.
· 107. Rather, s 546(3) has a long and well-understood operation. The FW Act enables, amongst others, a person affected by a contravention to initiate an enforcement proceeding and to receive the penalty, where one is imposed.
The Full Court referred to the decision of Jessup J in Murrihy v Betezy.com.au Pty Ltd(No. 2) (2013) 221 FCR 118, stating at [113] to [115]:
· 113. … Referring to Plancor, Jessup J made the following points in relation to the case before him, at [116],:
· First, the case did not call for a consideration of the situation in which a registered organisation is the applicant.
· Secondly, in the words of Branson and Lander JJ in Plancor, the applicant was “the individual affected by the conduct so penalised”, so the circumstance that she may, in some instances, have been compensated for some of the loss which she had sustained would not necessarily stand in the way of her receiving all or some of the penalties to be imposed.
· Thirdly, their Honours’ treatment of the “windfall” point was consistent with it being appropriate to take into account the costs and expenses to which the applicant, as applicant, had obviously been exposed in the assertion of her contractual and statutory rights in the proceeding. That was not to suggest that the s 546(3) discretion should be exercised in a way that provides a substitute for costs which are unavailable under s 570 of the FW Act, but, where there have clearly been such costs and expenses, it may serve to counter any suggestion that the applicant would walk away from the case with a “windfall” or “profit”.
· And fourthly, provisions of the kind now found in s 546(3)(b) and (c) of the FW Act — in the case of (c), to the extent that it refers to an applicant — have a considerable history in federal industrial legislation, and have for many years been recognised as setting up a presumptive entitlement in the nature of that of a common informer.
· 114. At [118][119], Jessup J further noted that:
· First, there were some areas of the case before his Honour in which the applicant would receive compensation (or damages). There were, however, areas in which she would not.
· Secondly, the case before him was not a case in which non-economic loss had been either alleged or proven. But that was not to say that the applicant should not be regarded as a victim of the Respondents’ contraventions whose position was affected for the worse by their conduct.
· Thirdly, his Honour had upheld the applicant’s claims for costs in some areas. While a payment under s 546(3)(c) should not be regarded as a back-door method of securing costs, nonetheless the recovery of costs to some extent has the potential to bear upon any consideration of whether such a payment would deliver a “windfall” to the applicant.
· Fourthly, the “common informer” policy considerations which are ingrained into s 546(3)(c) and its statutory predecessors were said to “speak loudly” in the circumstances of the case before his Honour. For the applicant — an individual employee in a responsible position in a non-industrialised workplace — to have advanced, and persisted with, claims which the Court had held to be legitimate, and to have done so in the face of the deferrals and procrastinations of the respondents, could only have constituted a substantial, continuing, burden for her. In a forensic and evidentiary environment which would have tested the most seasoned of litigators, the applicant maintained her focus and, ultimately, achieved the success which was always her due. His Honour considered it to be “four-square” within the policy of s 546(3)(c) that an employee in the position of the applicant should be encouraged to proceed as she had done, thereby making it the more likely that the applicable provisions of the FW Act will be more than mere words on the statute book.
· 115. We agree generally with the observations made by Jessup J.
With respect to the particular circumstances of the Applicant at trial, the Full Court said:
· 116. In this appeal, as Jessup J said of the case before him, the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If Mr Sayed had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.
And
· 119… although Mr Sayeddid not lead evidence himself about the extent of costs he had incurred in maintaining his prosecution of the CFMEU, it was obvious, on the face of the proceeding, that he had significant personal involvement in the maintenance of the proceeding where he was represented over a three day hearing by senior and junior counsel, instructed by solicitors he had retained, who also prepared the submissions as to penalty. Accepting that legal expenses should not be taken into account in considering “the true cost” of bringing such a prosecution because of the stipulation in s 570 that a party’s legal costs are not recoverable except in circumstances not applicable here, there can be no doubt that Mr Sayed , in bringing and maintaining the prosecution of the union, and in dealing with the solicitors he instructed and the counsel they briefed, must have incurred considerable time, trouble and lost opportunity, not to mention the real risk to his career that Mr Sayed assumed in running the proceeding.
There is no doubt that in these proceedings, the onus of prosecuting the case fell upon the Applicant herself. There is no doubt that in pursuing this litigation, she has incurred considerable time, trouble and, accepting her evidence, additional anxiety and stress at a cost to herself.
I am satisfied that in these circumstances, the penalty amounts I have determined should be paid to the Applicant.
Conclusion
I have considered the Applicant’s submission, that the Court include an Order in its decision that the Respondents be jointly and severally liable for any monetary pecuniary penalty Orders. This matter was not addressed by the Respondent in reply. I am prepared to make such an Order in relation to compensation for the loss suffered by the Applicant, because of the contraventions. I will not do so in relation to the penalties, as I have formed the view that the provisions of the Act, in relation to the payment of a penalty, clearly envisage separate Orders of penalties by persons and corporations, where a corporation and a person are Respondents in any proceedings.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 15 July 2016
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