Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd (No.2)
[2013] FCCA 1518
•3 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MINING & ENERGY UNION v ENDEAVOUR COAL PTY LTD (NO.2) | [2013] FCCA 1518 |
| Catchwords: PRACTICE & PROCEDURE – Industrial law proceedings – whether Court should declare that a breach has occurred in addition to making such a finding – declaration inappropriate. |
| Legislation: Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, item 2 of sch.16 Fair Work Act 2009, ss.539, 545, 546 Crimes Act 1914, s.4AA Federal Circuit Court of Australia Act 1999, ss.14, 15, 16 |
| Cases Cited: Construction, Forestry, Mining & Energy Union v Endeavour Coal Pty Ltd [2013] FCCA 473 Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
| Respondent: | ENDEAVOUR COAL PTY LTD ABN 38 099 830 476 |
| File Number: | SYG 1373 of 2011 |
| Judgment of: | Judge Cameron |
| Hearing dates: | Matter determined on written submissions |
| Date of Last Submission: | 5 August 2013 |
| Delivered at: | Sydney |
| Delivered on: | 3 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms C. Howell |
| Solicitors for the Applicant: | Mr A. Thomas, Construction, Forestry, Mining & Energy Union |
| Counsel for the Respondent: | Mr S.E.J. Prince |
| Solicitors for the Respondent: | Ashurst |
ORDERS
For its breach of item 2(2) of schedule 16 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, the respondent pay a penalty of $2,000.
The respondent pay the penalty to the applicant.
In all other respects the application be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1373 of 2011
| CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
Applicant
And
| ENDEAVOUR COAL PTY LTD ABN 38 099 830 476 |
Respondent
REASONS FOR JUDGMENT
Introduction
On 27 June 2013 I found that the applicant (“CFMEU”) had demonstrated that the respondent (“Endeavour”) had breached cl.28 of the West Cliff Colliery Workplace Agreement 2008 (“Agreement”) by failing to implement a “formalised improvement programme of six months duration”, as required by the Agreement’s Absenteeism Management Process, once it had determined that one of the CFMEU’s members, Mr McDermott, had reached stage three of that process with questions attached to the legitimacy of some of his absences from work. Relevantly, that breach amounted to a breach of item 2(2) of sch.16 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”). To the extent that is necessary to make it explicit that Endeavour’s breach of the Agreement amounted to a breach of that item, I do so now.
The matter was stood over for consideration of what, if any, penalties and orders for compensation ought to be made consequent upon the finding that Endeavour had breached the Agreement. The parties agreed that the matter should be decided on written submissions.
Relevant statutory provisions
The earlier reasons for judgment in this matter, Construction, Forestry, Mining & Energy Union v Endeavour Coal Pty Ltd [2013] FCCA 473, set out relevant statutory provisions at [4] to [11].
Additionally, in combination ss.539(2) and 546(2) of the Fair Work Act 2009 (“FWA”), as affected by item 16 of sch.16 of the FW (TPCA) Act, provide that the maximum pecuniary penalty for a contravention item 2(2) of sch.16 to the FW (TPCA) Act is 60 penalty units for an individual and 300 penalty units for a corporation. At the time of the breach a penalty unit was worth $110: s.4AA Crimes Act 1914. Section 545(2)(b) of the FWA provides that the Court may award compensation for loss suffered because of a contravention of the item.
Submissions
Applicant
The CFMEU submitted that instead of implementing a formalised improvement program as required by the Absenteeism Management Process, Endeavour subjected Mr McDermott to formal disciplinary action which culminated in a final warning on 1 April 2011. It submitted that Mr McDermott had lost the benefit of the formalised improvement process and, potentially, the opportunity to avoid disciplinary proceedings against him. It submitted that the contravention had a significant impact on Mr McDermott.
The CFMEU also submitted that the contravention represented a failure to afford an important condition under the Agreement and that the failure to implement a formalised improvement program and to take disciplinary action against Mr McDermott instead was deliberate.
The CFMEU further submitted that any lack of deliberateness in Endeavour’s breach of cl.28 of the Agreement was not such as to entitle it to significant leniency.
Respondent
Endeavour submitted that it had mistakenly believed that the agreement it entered into with Mr McDermott in November 2010 constituted a formalised improvement program. It submitted that that conduct was of a sort which could properly be expected of it when dealing with absences of an employee where there were concerns about the legitimacy of those absences and a misunderstanding of the requirements of cl.28 of the Agreement. Specifically, Endeavour submitted that this was not a case where it had ignored or wilfully disregarded its obligations under the Agreement. It submitted that it did something which achieved a result substantively similar to what might have been achieved under a formalised improvement program of six months duration but that it understood incorrectly the formal and particular requirements imposed by the regime within the Agreement, which it described as complex.
Endeavour submitted that the impact on Mr McDermott of any breach of cl.28 of the Agreement was illusory. Specifically, Endeavour submitted that even if a formalised improvement program had been put in place in November 2010, it would have had no impact on the disciplinary action it took against Mr McDermott in relation to his unauthorised absence on 18 March 2011 because the absence would have been in breach of any formalised improvement program on foot at that time.
Consideration as to penalty
As Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14 at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Tracey J adopted those considerations and described them 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.
Considerations relevant to this case are:
a)the nature and extent of the conduct which led to the breach;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breach;
d)whether there has been similar previous conduct by the respondent;
e)the deliberateness of the breach;
f)whether senior management was involved in the breach;
g)whether in the running of the business Endeavour had a culture of compliance;
h)contrition, corrective action and co-operation with the enforcement authorities; and
i)the need for specific and general deterrence.
The nature and extent of the conduct which led to the breach
The November 2010 agreement was significantly different in content from what a formalised improvement program might have contained. Specifically, it was not a program and it did not seek improvement over time. Rather, it required Mr McDermott’s immediate and continuing compliance with Endeavour’s attendance requirements if he was to work on the weekend day shift. This reflected Endeavour’s insistence on Mr McDermott’s predictable attendance at work when rostered to that shift.
The mistaken understanding that the November 2010 agreement was a formalised improvement program, which I accept to have been the case, led to there being no such program in place.
The failure to place Mr McDermott on a formalised improvement program affected only him.
The circumstances in which that conduct took place
The breach occurred in circumstances where Mr McDermott had previously failed to attend work regularly, or always to remain at work, when he was rostered on the weekend day shift.
The nature and extent of any loss or damage sustained as a result of the breach
The CFMEU submitted that the loss and damage suffered by Mr McDermott was the fact that he was given a final warning after his last relevant failure to attend work. However, that warning occurred in the context of his earlier return to the weekend day shift following his agreement to the conditions contained in the November 2010 agreement. I accept that Mr Young thought the November 2010 agreement was a formalised improvement program but Endeavour’s confusion on this point should not lead to further confusion. Endeavour’s breach was its failure to implement a formalised improvement program, not its belief that the November agreement was such a program or its conditioning of Mr McDermott’s return to the weekend day shift on his agreement to it. I am satisfied that Endeavour would not have permitted Mr McDermott to return to the weekend day shift if he had not signed the November 2010 agreement.
It was Mr McDermott’s breach of the November 2010 agreement by being absent from work on 18 March 2011 without submitting a medical certificate which led to his return to weekday shifts and to the final warning. The CFMEU did not attempt to show why, if a formalised improvement program, had been put in place, that would not have occurred or that, if a formalised improvement program had been put in place, Mr McDermott’s absence would have been substantiated in accordance with the November 2010 agreement.
The CFMEU has not demonstrated that Mr McDermott suffered any loss because Endeavour did not implement a formalised improvement program.
Whether there has been similar previous conduct by the respondent
Although it appears that Endeavour used agreements similar to the November 2010 agreement with other employees, the evidence did not suggest that it had previously been required to implement a formalised improvement program in relation to any particular employee, or more generally, and that it had failed to do so.
The deliberateness of the breach
Not much thought would have been required to conclude that the November 2010 agreement was not a formalised improvement program but I accept that Endeavour did not turn its mind to the issue or analyse whether the November 2010 agreement satisfied the relevant requirements of the Absenteeism Management Process flow chart which governed the situation.
Whether senior management was involved in the breach
I am satisfied that Mr Hannigan, the general manager of the West Cliff Colliery (“Mine”), and Mr Young, then the maintenance manager at the Mine, were the relevant decision-makers.
Whether in the running of the business Endeavour had a culture of compliance
I am satisfied that Endeavour did seek to comply with its obligations under industrial legislation and instruments and that the breach on this occasion was inadvertent.
Contrition, corrective action and co-operation with the enforcement authorities
The case brought by the CFMEU was detailed and complex. Endeavour succeeded in its defence to the CFMEU’s claims in all respects other than the claim regarding the lack of a formalised improvement program for Mr McDermott. In the circumstances, I am not persuaded that Endeavour’s defence to all of the CFMEU’s claims amounted to a lack of contrition in respect of the present issue, particularly when I accept that it had an incorrect appreciation of the operation of the Absenteeism Management Process flow chart. Moreover, in its written submissions on penalty, Endeavour expressed contrition over its misunderstanding which led to the finding of breach and expressed its intention to comply fully with the Absenteeism Management Process now that it has had the benefit of the Court’s clarification on what is required by the flow chart. I accept that submission as representing Endeavour’s attitude.
The need for specific and general deterrence
I am not persuaded that Endeavour needs to be deterred from future conduct of a similar nature. The breach was inadvertent and concerned a somewhat esoteric aspect of the Absenteeism Management Process at the Mine. Indeed, it was not demonstrated that any other employee at the Mine had reached the stage in the flow chart reached by Mr McDermott or that a formalised improvement program had been required on any other occasion. I infer that the breach on this occasion arose out of Endeavour’s lack of familiarity with what the flow chart relevantly required.
Nevertheless, some element of general deterrence is required to demonstrate the Court’s disapproval of a party not complying with an industrial instrument into which it has freely entered.
Further matters
The CFMEU has sought a declaration “that the respondent contravened clause 28 of the Agreement in that it failed to follow the Absenteeism Management Process by implementing a formalised improvement programme”.
Endeavour submitted that a declaration was inappropriate, serving only to restate its contravention of the Agreement, to which the CFMEU responded that the proposition that a declaration ought not be made did not represent the practice of the Federal Court of Australia nor this Court.
I am unaware that there is a standard practice of the sort identified by the applicant but, having considered the parties’ submissions, am of the view that in this Court declarations should be reserved for the declarations of right referred to in s.16(1) of the Federal Circuit Court of Australia Act 1999 (“Act”). Arguably, a declaration of the nature sought by the CFMEU is beyond the Court’s power, which is relevantly to grant remedies under s.14 of the Act either as orders or writs under s.15 or as binding declarations of right under s.16. The “declaration” sought by the CFMEU would purport to be one of those forms of relief when in fact it would be no more than an encapsulation of a factual finding made in earlier reasons for judgment. The Court’s reasons for judgment speak for themselves and an encapsulation of the sort sought by the CFMEU necessarily cannot reflect them adequately.
Conclusion
Having taken all the matters discussed above into consideration I find that an appropriate penalty in this case lies at a very low point on the scale. I conclude that Endeavour should pay a penalty of $2,000 and that the penalty should be paid to the CFMEU.
The request for a declaration of breach will be refused.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 3 October 2013
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