Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v CJ Manfield Pty Ltd (No.2)
[2011] FMCA 724
•28 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA v CJ MANFIELD PTY LTD (NO.2) | [2011] FMCA 724 |
| INDUSTRIAL LAW – Penalties – agreement between applicant and respondent on amount of penalty – whether within permissible range – factors to be considered. |
| Electrical, Engineering and Contracting Industries (Northern Territory) Award 1995, cl.33.10 Crimes Act 1914 (Cth), s.4AA(1) Workplace Relations Act 1996 (Cth), ss.173, 232, 233, 234, 235, 236, 718(1) - Item 3(d), 719 (1), (2) and (4), 841(b) |
| ACCC v Colgate-Palmolive Pty Ltd [2002] ATPR 41-880; [2002] FCA 619 Attorney-General v Tishy (1982) 30 SASR 84 Carr v CEPU & Anor [2007] FMCA 1526 Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 Williams v MacMahon Mining Services Pty Ltd(No.3) (2010) 195 IR 161; [2010] FMCA 49 Wong v The Queen (2001) 207 CLR 584; [2001] HCA 64 |
| Applicant: | COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA |
| Respondent: | CJ MANFIELD PTY LTD |
| File Number: | DNG 5 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 19 July 2011 |
| Date of Last Submission: | 1 August 2011 |
| Delivered at: | Perth (by telephone-link to Sydney and Darwin) |
| Delivered on: | 28 September 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Wright |
| Solicitors for the Applicant: | Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing And Allied Services Union Of Australia |
| Counsel for the Respondent: | Mr M Follett |
| Solicitors for the Respondent: | Ward Keller |
ORDERS
That the respondent pay, by way of penalty for breach of clause 33.10 of the Electrical, Engineering and Contracting Industries (Northern Territory) Award 1995, the sum of $8,500 to the applicant by
28 October 2011.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNG 5 of 2010
| COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA |
Applicant
And
| CJ MANFIELD PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
On 21 June 2011 this Court found that the respondent had breached clause 33.10 of the Electrical, Engineering and Contracting Industries (Northern Territory) Award 1995,[1] by failing to pay:
a)Mr Stewart the sum of $4,778.75; and
b)Ms DiIulio the sum of $5,574.08,
by way of accrued annual leave on termination, and the Court made an order that the respondent pay Mr Stewart and Ms DiIulio the above amounts.[2]
[1] “Award”.
[2] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v CJ Manfield Pty Ltd (2011) 63 AILR 101-370; [2011] FMCA 374 at para.131 per Lucev FM (“CJ Manfield (No 1)”).
At hearing in Darwin on 19 July 2011 the parties indicated that they had agreed on proposed penalty quantum. The Court ordered that short submissions be filed by each party in support of the proposed agreed penalty quantum. The respondent and applicant filed those submissions on 29 July 2011 and 1 August 2011 respectively.
Issues
The only issue for the Court is whether the agreed penalties are appropriate penalties. This involves:
a)a consideration of the principles concerning the approach to be taken to penalty by the Court where an agreed penalty is proposed; and
b)an assessment of whether the penalty proposed is appropriate having regard to relevant considerations.
General principles concerning penalty
The courts have regard to general principles which have been developed in relation to the imposition of penalties, including the following:
a)fundamentally, the penalty must be proportionate to the gravity of the contravening conduct;[3]
[3] Attorney-General v Tishy (1982) 30 SASR 84 at 92 per Wells J; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2011] FCA 810 at para.25 per Gilmour J (“ABCC”).
b)penalties are imposed for the following purposes:
i)punishment, proportionate to the offence and according to prevailing standards;
ii)personal or specific deterrence, assessing the risk of reoffending, and general deterrence, as a deterrent to others who might be likely to offend; and
iii)rehabilitation;[4]
c)the task of setting penalty is one of instinctive synthesis in which the court takes account of all relevant factors, and arrives at a single result taking due account of all of those relevant factors;[5]
d)proportionality and consistency are a final check on the penalty assessed;[6]
e)courts may identify a range of factors appropriate to the assessment of penalty, but ought to be wary of the use of checklists which “give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention”;[7] and
f)courts ought also be wary of comparing penalties from other cases when assessing the amount of penalty to be fixed.[8]
[4] Ponzio v B & P Caelli Constructions Pty Ltd and Ors (2007) 158 FCR 543 at 559-560 per Lander J; [2007] FCAFC 65 at para.93 per Lander J (“Caelli Constructions”); ABCC at para.26 per Gilmour J.
[5] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 567-568 per Gray J and 572 per Graham J; [2008] FCAFC 8 at para.27 per Gray J and para.55 per Graham J (“Australian Ophthalmic Supplies”); Wong v The Queen (2001) 207 CLR 584 at 611-612 per Gaudron, Gummow and Hayne JJ; [2001] HCA 64 at paras.74-76 per Gaudron, Gummow and Hayne JJ; ABCC at para.27 per Gilmour J.
[6] Australian Ophthalmic Supplies FCR at 572 per Graham J; FCAFC at para.54 per Graham J; ABCC at para.28 per Gilmour J.
[7] ABCC at para.30 per Gilmour J; Australian Ophthalmic Supplies FCR at 580 per Buchanan J; FCAFC at para.91 per Buchanan J.
[8] NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 per Burchett and Kiefel JJ; ABCC at para.31 per Gilmour J.
Relevant principles concerning agreed penalty
In dealing with proposed agreed penalties the courts have developed certain principles for guidance. Principles relevant to these proceedings include:
a)that the Court bears ultimate responsibility for penalty, is not bound by the parties’ agreement, and must consider for itself what constitutes an appropriate penalty;[9]
b)determining penalty quantum is not an exact science, and within a permissible range a particular figure is not necessarily more appropriate than another figure;[10]
c)promoting settlement of litigation (particularly lengthy litigation) is in the public interest, and where the parties agree on facts and penalty, they may present a statement of agreed facts, including a view as to the effect of those facts, and submissions on penalty;[11]
d)in determining the appropriate penalty the Court will examine all the circumstances, including an agreed statement of facts, and, if appropriate, may act on that statement;[12] and
e)a jointly proposed penalty will not be rejected simply because the Court might have chosen a different figure; it is sufficient if the jointly proposed penalty is “within the permissible range”,[13] or “broadly speaking”, within that range.[14]
[9] Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR 41-993 at 48,626, 48,627 and 48,632 per Branson, Sackville and Gyles JJ; [2004] FCAFC 72 at paras.53(i), 56 and 79 per Branson, Sackville and Gyles JJ (“Mobil Oil”); Furlong v AWU & Ors (2007) 162 IR 171 at 173 per Burchardt FM; [2007] FMCA 443 at para.7 per Burchardt FM (“Furlong”).
[10] Mobil Oil ATPR at 48,626 per Branson, Sackville and Gyles JJ; FCAFC at para.53(ii) per Branson, Sackville and Gyles JJ.
[11] Mobil Oil ATPR at 48,626 per Branson, Sackville and Gyles JJ; FCAFC at para.53(iii) per Branson, Sackville and Gyles JJ.
[12] Mobil Oil ATPR at 48,626 per Branson, Sackville and Gyles JJ; FCAFC at para.53(v) per Branson, Sackville and Gyles JJ.
[13] Mobil Oil ATPR at 48,626 per Branson, Sackville and Gyles JJ; FCAFC at para.53(vi) per Branson, Sackville and Gyles JJ.
[14] ACCC v Colgate-Palmolive Pty Ltd [2002] ATPR 41-880 at 45,064 per Weinberg J; [2002] FCA 619 at para.33 per Weinberg J.
The principles concerning agreed penalty as set out above have been applied by the courts in relation to contravention of federal industrial legislation.[15]
Assessment of appropriate penalty
[15] See, for example, Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 164 IR 375 at 386-388 per Le Miere J; [2006] WASC 317 at paras.53-56 per Le Miere J (“Leighton Contractors”); Carr v CEPU & Anor [2007] FMCA 1526 at para.6 per Lucev FM; ABCC at para.34 per Gilmour J.
General considerations
In assessing whether the proposed penalty is appropriate there are a number of considerations, relevant to this matter, which the Court may consider.[16] They are:
[16] See CFMEU v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at 232 per Branson J; [1999] FCA 1714 at paras.7-8 per Branson J and Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52, 152-153 per French J, both of which were cited with approval by this Court in Furlong IR at 173-174 per Burchardt FM; FMCA at paras.8-10 per Burchardt FM. See also Commonwealth Bank of Australia & Anor v Finance Sector Union of Australia (2007) 157 FCR 329 at 362 per Branson J; [2007] FCAFC 18 at para.181 per Branson J (“Commonwealth Bank Appeal”); Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61 at 69 per Tracey J; [2008] FCA 1426 at para.40 per Tracey J; ABCC at para.35 per Gilmour J.
a)the relevant statutory scheme;
b)the nature and extent of the conduct which led to the breaches;
c)the circumstances in which that conduct took place;
d)the nature and extent of any loss or damage sustained as a result of the breaches;
e)whether there had been similar previous conduct by the respondent;
f)whether the breaches were properly distinct or arose out of the one course of conduct;
g)the size of the business enterprise involved;
h)whether or not the breaches were deliberate;
i)whether senior management were involved in the breaches;
j)whether the party committing the breach had exhibited contrition;
k)whether the party committing the breach had taken corrective action;
l)whether the party committing the breach had cooperated with the enforcement authorities; and
m)the need for specific and general deterrence.
Statutory scheme
The statutory scheme under the Workplace Relations Act 1996 (Cth)[17] included the following objects:
[17] “WR Act”.
…
3. (d) ensuring that, as far as possible, the primary responsibility for determining matters affecting the employment relationship rests with the employer and employees at the workplace or enterprise level; and
(e) enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances; and
(f) ensuring compliance with minimum standards, industrial instruments and bargaining processes by providing effective means for the investigation and enforcement of:
(i) employee entitlements; and
(ii) the rights and obligations of employers and employees, and their organisations; and
(g) ensuring that awards provide minimum safety net entitlements for award‑reliant employees which are consistent with Australian Fair Pay Commission decisions and which avoid creating disincentives to bargain at the workplace level; and …
If read literally the above objects may be seen to give rise to conflict between provisions in an award on the one hand, and an agreement reached between an employer and an employee on the other hand, as was the case in this matter.[18] However, in the absence of provisions in the WR Act prescribing that a simple agreement between an employer and an employee overrides an award provision, s.719(1) of the WR Act has effect. Section 719(1) of the WR Act provides as follows:
(1) An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
[18] CJ Manfield (No 1) at paras.5-6 per Lucev FM.
An award, and in this case the Award, is an “applicable provision” for the purposes of s.719(1)(a) of the WR Act, and in this case was found to have been breached by the respondent.[19] It is clear that the WR Act evinces a policy that award provisions are to be complied with, unless an agreement countenanced by the WR Act and prevailing over an award is entered into, and that the object of ensuring that an award is complied with is to be achieved and enforced by means of a penalty provision.
[19] CJ Manfield (No 1) at para.131 per Lucev FM.
In this case, the failure to pay accrued annual leave on termination was also reinforced by relevant statutory provisions, namely ss.173 and 232-236 of the WR Act, which provided that the terms of the employment agreement as entered into, which provided for payment of a loading of 20% in lieu of annual leave and other leave entitlements, were of no effect because it purported to contract out of the Australian Fair Pay and Conditions Standard,[20] and also because it reduced an otherwise irreducible entitlement to accrued annual leave.[21]
[20] WR Act, s.173.
[21] CJ Manfield (No 1) at para.107 per Lucev FM; MacMahon Mining Services Pty Ltdv Williams (2010) 201 IR 123 at 135 per Barker J; [2010] FCA 1321 at paras.66-68 per Barker J (“MacMahon Mining Services”).
Nature and extent of the conduct
The nature of the conduct is a breach of applicable Award provisions in circumstances where the respondent considered that it had over-Award contractual arrangements which met its Award obligations. Whilst the Court has found that the employer’s characterisation of the circumstances is incorrect, and that consequently there has been a breach of the Award, the employer’s breach can be described as not being a deliberate breach of the Award. The extent of the conduct is also relevantly limited, on the evidence, to two employees with relatively short periods of service.
The breach can therefore be characterised as non-deliberate, and affecting a small number of employees over a short period of time.
Circumstances in which relevant conduct took place
Some of the circumstances in which the relevant conduct took place are described above. It is also relevant that the employees were fly-in / fly-out employees, working in a relatively isolated workplace, and as a consequence having limited conduct with representatives of the applicant and respondent with appropriate knowledge to assist in the resolution of any dispute concerning annual leave.
Nature and extent of any loss or damage
The nature of the loss is purely monetary.[22] The extent of the loss is a relatively modest amount in each case: $4,778.75 for Mr Stewart and $5,374.08 for Ms DiIulio.
[22] In the circumstances of this case there was no evidence that the employees concerned had actually applied for annual leave, and been denied that leave, therefore the claim, and the loss, were limited to the monetary amount of accrued annual leave.
Similar previous conduct
There is no evidence of similar previous conduct by the respondent, and it is therefore appropriate to treat this as a first breach of an award by the respondent.
Whether a single course of conduct or distinct breaches
The Employment Agreement for each of Mr Stewart and Ms DiIulio contained unenforceable contractual provisions relating to payment of a loading in lieu of annual leave, which the respondent considered to be an over-Award payment, but which was not.[23] Consequently, the respondent failed to pay annual leave upon the termination of Mr Stewart and Ms DiIulio’s services with effect from 9 April 2009. Having regard to the provisions of s.719(2) of the WR Act, there can be no doubt that there was but a single course of conduct by the respondent, and not distinct breaches, in the circumstances of this case.
[23] For reasons set out in detail in CJ Manfield (No 1) at paras.38-122 per Lucev FM.
Size of business enterprise involved
The evidence in relation to the size of the respondent as a business enterprise was non-specific, but sufficient to infer that it was a small to medium size enterprise engaged in the provision of specialist refrigeration services to the mining industry. There was no evidence that it employed or engaged, or had regular specific access to, specialist human resource or employment advisers.
Whether breaches were deliberate
The Court has found above that the breaches were not deliberate insofar as the respondent did not set out to deliberately breach the terms of the Award, but rather entered into a contractual arrangement which the Court has found not to be enforceable, and which has had the effect of rendering null and void the over-Award benefit that the respondent thought that it was affording to the employees. Therefore, whilst the actual conduct which gave rise to the breach was deliberate, there was not, by reason of that conduct, a deliberate breach of the Award.
Whether senior management involved in the breaches
The evidence concerning the involvement of senior management is not especially specific. However, given the apparent size of the respondent’s enterprise, it can be inferred that senior management were involved in the breaches insofar as the conduct giving rise to them was concerned.
Whether corrective action taken
The Court was informed by Counsel for the respondent in submissions that corrective action by way of a full annual leave review for employees had been undertaken, a matter which does not appear to be in dispute. Therefore, to that extent, there has been corrective action taken by the respondent to remedy any possible future breaches of this type.
Whether contrition exhibited
There is no specific evidence of contrition on the part of the respondent, but the Court was informed that Mr Stewart and Ms DiIulio had now been paid their accrued annual leave, and that a full annual leave review for all employees has been undertaken by way of corrective action. There is, therefore, some limited information from which some contrition may be inferred. The mere fact that the respondent did not intend to breach the Award, or that it breached the Award because of an erroneous view of the applicable law, does not, contrary to the respondent’s submissions, prevent the respondent making an overt expression of regret or remorse, which it did not do in this case.
Whether co-operation with enforcement authorities
For relevant purposes the enforcement authority in this instance is the applicant, which is a registered organisation under the WR Act, and which has the capacity to enforce an award.[24] Save for the substance of the dispute, it appears that there has been significant co-operation between the applicant and respondent, to the extent that:
a)a relatively detailed statement of agreed facts was filed and served in the substantive proceedings; and
b)in relation to the penalty proceedings there has been conferral and agreement upon penalty quantum.
[24] WR Act, s.718(1) - Item 3(d).
The respondent has therefore in the Court’s view co-operated with the applicant to a considerable extent, and to an extent which has saved both the parties and the Court considerable time and money.
The need for specific and general deterrence
General and specific deterrence are significant considerations in any penalty case because deterrence is a primary objective of imposing penalties.[25] Specific deterrence relates to the need to deter further breaches of the Award, whilst general deterrence refers to the need to deter others from breaching the Award or awards by showing the seriousness with which the Court treats a breach of the Award. Penalties must be meaningful and consistent with other considerations to be taken into account in determining an appropriate penalty,[26] and in light of legislative changes in recent years breaches of industrial laws are now treated more seriously than has been the case in the past.[27]
[25] Leighton Contractors IR at 391 per Le Miere J; WASC at para.74 per Le Miere J.
[26] ACCC v IPM Operations Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at para.66 per Young J.
[27] Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467 at 487 per Merkel J; [2005] FCA 1847 at para.72 per Merkel J; Commonwealth Bank Appeal FCR at 364 per Branson J; FCAFC at paras.191-192 per Branson J; ABCC at paras.32-33 per Gilmour J.
In circumstances where the respondent has co-operated in the general sense referred to above, has paid the amount ordered by the Court to be paid to Mr Stewart and Ms DiIulio, and has undertaken corrective action with respect to the subject matter of the breach, the Court’s view is that the risk of re-offending is low, and that a significant penalty by way of specific deterrence is unnecessary in this instance. General deterrence remains a significant factor, because as this case, and MacMahon Mining Services demonstrate, there appears to be some currency to the view that employers can contract out of annual leave arrangements specified under the relevant industrial legislation or awards, when that is generally not the case.
Penalties
The maximum penalty in this case is 300 penalty units.[28] A “penalty unit” is $110.[29] Therefore, the maximum penalty for the breach by the respondent is $33,000. The proposed penalty therefore reflects a sum of just over one quarter of the maximum penalty.
[28] WR Act, s.719(4)(b).
[29] Crimes Act 1914 (Cth), s.4AA(1).
Having regard to all of the factors necessary for consideration in assessment of penalty the Court considers that this is a case where the appropriate penalty is somewhere in the low to mid range of penalties. That is, say between 10% and 50% of the maximum penalty. When regard is had to the totality of the respondent’s conduct set out above, the Court is of the view that the appropriate penalty cannot be anywhere approaching the top end of the low to mid range of penalty, but rather something in the bottom half of that penalty range, that is roughly 10% to 30% of the maximum penalty. A penalty of slightly more than 25% of the maximum does not therefore appear to be inappropriate. It is a penalty which reflects the seriousness of the breach and the respondent’s culpability. It is a penalty neither manifestly inadequate nor manifestly excessive. It is therefore within the permissible or reasonable range of penalties.[30]
[30] Caelli Constructions FCR at 564-565 per Jessup J; FCAFC at para.129 per Jessup J; ABCC at para.127 per Gilmour J.
To whom to pay the penalty?
The question of to whom to pay the penalty was not the subject of any specific submissions in this case, however, the Court has previously observed that:
a)the Court has the power to order that any penalty, or part of any penalty, imposed be paid to a particular person;[31] and
b)the usual order, when the proceeding is not brought by the statutory regulator, is for payment to the person or organisation applying for the penalty. That is because the proceeding is based on the concept of an action brought by a common informer, and where the conduct in question targets a particular organisation or person, and that person is authorised to commence, and commences, a proceeding for the imposition of a penalty, in the usual course it is appropriate to order that the penalty be paid to the organisation or person.[32]
[31] Williams v MacMahon Mining Services Pty Ltd(No 3) (2010) 195 IR 161 at 177 per Lucev FM; [2010] FMCA 49 at para.65 per Lucev FM (“MacMahon Mining Services (No 3)”); WR Act, s.841(b).
[32] Gibbs v City of Altona (1992) 37 FCR 216 at 223 per Gray J; Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (No 2) (2001) 110 IR 372 at 375 per Merkel J; [2001] FCA 672 at para.8 per Merkel J; MacMahon Mining Services (No 3) IR at 177 per Lucev FM; FMCA at para.66 per Lucev FM.
There is nothing in the circumstances of this case which warrants a departure from the usual order. There will therefore be an order that the penalty be paid to the applicant.
Orders
For the reasons set out above there will be an order that the respondent pay, by way of penalty for breach of clause 33.10 of the Award, the sum of $8,500 to the applicant by 28 October 2011.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 28 September 2011
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