Construction, Forestry, Mining and Energy Union v Whitehaven Coal Limited
[2014] FCCA 2657
•18 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v WHITEHAVEN COAL LIMITED | [2014] FCCA 2657 |
| Catchwords: INDUSTRIAL LAW – Admitted contraventions of Fair Work Act 2009 (Cth) – whether proposed by consent declarations and orders should be made – whether in all the circumstances the agreed penalties are appropriate – whether Court should give effect to the settlement reached by parties – whether the Court should order penalty to be paid to the applicant. |
| Legislation: Fair Work Act 2009 (Cth), s.546 |
| Cases cited: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 Ministry for Industry, Tourism and Resources v Mobil Oil Pty Ltd [2004] FCAFC 72 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
| Respondent: | WHITEHAVEN COAL LIMITED |
| File Number: | SYG 1015 of 2013 |
| Judgment of: | Judge Emmett |
| Hearing date: | 30 October 2014 |
| Date of Last Submission: | 10 November 2014 |
| Delivered at: | Sydney |
| Delivered on: | 18 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Ms Kathryn Presdee (Slater & Gordon) |
| Solicitors for the Respondents: | Mr Drew Pearson (Herbet Smith Freehills) |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1015 of 2013
| CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
Applicant
And
| WHITEHAVEN COAL LIMITED |
Respondent
REASONS FOR JUDGMENT
Pursuant to joint submissions, the parties seek that the Court make the following declarations and orders:
“THE COURT DECLARES THAT:
1. The respondent breached section 26 of the Whitehaven Open Cut Operation (Tarragonga) Enterprise Agreement 2010 and thereby contravened section 50 of the Fair Work Act 2009 (Cth), which is taken to constitute one single contravention pursuant to section 557(1) of the Fair Work Act 2009 (Cth).
2. The Respondent failed to notify the Chief Executive Officer of the Commonwealth Services Delivery Agency (Centrelink) before it dismissed each of the employees for reasons of an economic, technological, structural or similar nature and thereby contravened section 530(4) of the Fair Work Act 2009 (Cth) which is taken to constitute one single contravention pursuant to section 557(1) of the Fair Work Act 2009 (Cth).
AND THE COURT ORDERS THAT
1. A pecuniary penalty of $19,000 is imposed on the Respondent pursuant to section 546 of the Fair Work Act 2009 (Cth) in respect of the contravention referred to in the declarations made in Order 1 above.
2. A pecuniary penalty of $1,000 is imposed on the Respondent pursuant to section 546 of the Fair Work Act 2009 (Cth) in respect of the contravention referred to in the declarations made in Order 2 above.
3. The above penalties are to be paid to the Applicant in accordance with section 546(3) of the Fair Work Act 2009 (Cth) within 30 days of the date of this order.
4. The proceedings be otherwise dismissed.
5. There be no order as to costs.”
The orders are sought on the basis of a Statement of Agreed Facts. I make findings as referred to in that Statement of Agreed Facts which provides as follows:
“Background
1. Whitehaven Coal Mining Limited (Whitehaven) operates open cut coal mines. In March 2013, it operated the Tarrawonga, Rocglen and Werris Creek mines located in the Gunnedah Basin in New South Wales (the Mines).
2. The Construction, Forestry, Mining and Energy Union (CFMEU) is an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 and represented employees at the Mines.
Coal Market Conditions in late 2012 / early 2013
3. In November and December 2012, as part of enterprise bargaining sessions, the CFMEU and employees at the Mines were informed that Whitehaven was facing challenging market conditions and that:
a. its operations needed to be reviewed in order to survive;
b. there would be a review of production and maintenance manning levels and shift structures;
c. there would need to be a review of equipment requirements;
d. there would need to be a review of all costs;
e. Rocglen and Sunnyside (another mine Whitehaven was operating that was placed into care and maintenance in October 2012) profitability (EBITDA) went from a profit of approximately $28 per tonne in January 2012 to a loss of approximately $14 per tonne in September 2012; and
f. Tarrawonga profitability (EBITDA) went from a profit of approximately $41 per tonne in January 2012 to a loss of approximately $7 per tonne in November 2012.
4. On 26 February 2013, the Whitehaven Group released its financial results for the half year ending 31 December 2012. In that period, the Whitehaven Group recorded a net loss after tax of $47 million, down from a profit of $19.9 million in the previous corresponding period. Amongst the key factors underpinning the result were:
a. substantially lower average coal prices. Coal prices averaged US$92 per tonne during the half year ending 31 December 2012, compared to US$108 in the previous corresponding period; and
b. unfavourable foreign exchange impacts.
5. In light of these financial results, in February 2013, local management at the Mines, which included Mr Wilkinson who at the time was employed as the General Manager for Open Cut Operations and Mr Wood who at the time was employed as the Coal Operations Manager, upon instructions from senior management, were required to give consideration to proposals and options as to how costs could be reduced across all areas of open cut production.
6. However, irrespective of any planning of options and proposals, a final decision could only be made by Mr Jamie Frankcombe (Executive Manager – Open Cut Operations), who in turn would need to obtain the approval and authorisation of Mr Tony Haggarty, the outgoing Managing Director / CEO, and by Mr Paul Flynn, the incoming Managing Director / CEO (the Senior Executives). It was the decision of the incoming CEO, Mr Flynn, which would be final.
7. During February and March 2013, one proposal which was considered to reduce costs was to amend the mine plan for each Mine by amending the “strip ratio”. The mine plan identifies the particular “strips” or areas of the mine that are to be mined and the sequence in which they will be mined. It also specifies the amount and type of machinery, equipment and personnel required to mine each strip. One of the key aspects of a mine plan is the “strip ratio”, which represents the amount in cubic metres of overburden that must be removed per tonne of coal. For example, if the strip ratio is 8:1, this means 8 cubic metres of overburden has to be removed per tonne of coal being extracted. A higher strip ratio generally represents higher production costs per tonne of coal.
8. A change in the “strip ratio” would reduce costs because Whitehaven would mine coal which required less effort to extract and was thus cheaper to mine. Coal which was harder (and thus more costly) to mine would not be mined while the market price of coal was low. A reduction in the “strip ratio” would also require fewer personnel and less equipment to extract the coal but could maintain the existing coal production rates.
9. During early March 2013, local management at the Mines explored a proposal which would involve a reduction in the “strip ratio”. In exploring this proposal, local management gave consideration to the impact of the reduced “strip ratio” upon the number of staff required and the level of equipment that would need to be operated. A financial evaluation of the expected cost savings from the planned changes were that the Whitehaven Group would save somewhere between $27.6 million (based on the direct cost saving associated with reduced equipment and personnel needs) and $49.8 million (based on the changes in the mine plan). This proposal was discussed with the Senior Executives, who indicated that local management team should take steps to finalise the proposal, but that a final decision would be made by Mr Flynn. Neither the CFMEU nor the employees were consulted at any stage of the development of this proposal.
10. By this time, Whitehaven was in a position where it was losing $2 million per week and trading conditions were continuing to deteriorate.
11. In the late afternoon of Thursday 21 March 2013, the local management team spoke with Mr Frankcombe via the telephone. Mr Frankcome said:
“I believe everyone [in the Senior Executive] is in approval [of the plan that has been developed], but we should have a decision from Paul [Mr Flynn] later tonight, but please plan to go ahead with the restructure tomorrow morning.”
12. Following this conversation, the local management team commenced making preparations to notify employees of the decision to implement a restructure.
13. At 2.19 am on Friday 22 March 2013, Mr Frankcombe and local management received an email from Mr Flynn conveying his approval of the proposal.
14. It was at this point that Whitehaven made the final and definite decision that it intended to implement major workplace change.
The Enterprise Agreements
15. At all relevant times:
A. the Mine Operators at Rocglen Mine were covered by the Whitehaven Open Cut Operations (Production) Collective Agreement 2009 (the Rocglen Agreement). A copy of this agreement is attached and marked ‘A’;
B. the Mine Operators at Tarrawonga were covered by the Whitehaven Open Cut Operations (Tarrawonga) Enterprise Agreement 2010 (the Tarrawonga Agreement). A copy of this agreements is attached and marked ‘B’; and
C. Maintenance employees were covered by the Whitehaven Open Cut Operations (Maintenance) Employee Collective Agreement 2009 (the Maintenance Agreement). A copy of this agreement is attached and marked ‘C’.
16. The Rocglen and Maintenance Agreements contained obligations upon Whitehaven to notify employees of a “definite decision” to introduce major workplace change. Specifically, clause 28 of both the Rocglen and Maintenance Agreements required Whitehaven to notify affected employees when it made a “definite decision” to introduce major workplace change but did not require any consultation regarding such change. These Agreements did not impose any positive obligation upon Whitehaven to consult with affected employees prior to the making of a “definite decision”.
17. The notification and consultation obligations of the Tarrawonga Agreement were different. Clause 26 of the Tarrawonga Agreement required Whitehaven to notify employees once a decision had been made and to consult with employees as to the nature of the changes. It provided:
‘If Whitehaven makes a decision that it intends to implement any major workplace change which is likely to have a significant effect on Employees, it will notify Employees and consult with them as to the nature of the change and the likely consequences for affected Employees.
Employees may seek to be and be represented during this consultation.
Whitehaven will promptly consider the views expressed by Employees or their representatives as part of this consultation process about the planned change.
This consultation process will not give cause for any delay to the implementation of the change, which may be implemented by Whitehaven as soon as practicable after notification of the change….’
18. Whitehaven interpreted clause 26 of the Tarrawonga Agreement, and understood it to mean, that Whitehaven was obliged to notify affected employees once a “definite decision” had been made regarding the restructure but that its obligation to consult did not in any way prevent the implementation of this restructure. In other words, Whitehaven considered that it was entitled to notify employees once a definite decision had been made to implement the redundancies and to consult with employees after that decision had been made if, as Whitehaven believed, it was imperative to implement the restructure as soon as possible.
Events of 22 March 2013
19. At or about 7:30 am on the morning of Friday 22 March 2013 local management addressed all day shift employees. They informed employees that Whitehaven had experienced significant financial losses as a result of a high Australian dollar and a low coal price Whitehaven needed to reduce its costs and intended to do this by changing the mine plans and reducing equipment and personnel needs.
20. On the morning of 22 March 2013, the CFMEU were also notified via email and telephone of the restructure and its immediate implementation.
21. Following this notification, local management then spoke individually with all day shift employees, including the Mine Operators at Tarrawonga, to advise if their position had been made redundant.
22. At 4.30 pm on 22 March 2013, local management informed all night shift employees of the Restructure in the same terms as set out in paragraph 18 above. Following this notification, local management spoke individually with all night shift employees, including Mine Operators at Tarrawonga, to advise if their position had been made redundant.
23. The employees whose positions were made redundant were paid in lieu of the required notice period and left site on 22 March 2014. Whitehaven arranged for an employment consultant to assist such employees to find future employment and agreed to provide a letter detailing the employee’s training and experience if requested.
24. Between 22 and 26 March 2013, local management then undertook further discussions with the CFMEU where it considered and responded to issues raised by the CFMEU.
25. The CFMEU has not disputed that there were a genuine economic need for the redundancies, but sought compensation for the affected employees in respect of the failure to adequately consult.
26. Whitehaven has paid to each affected redundant employee all entitlements owing to them. In addition, Whitehaven has settled the claims which the CFMEU commenced on behalf of some affected employees by paying a confidential monetary settlement to each of them.
27. By its admission of liability in the present proceedings, Whitehaven accepts that there was no opportunity given to the 14 employees covered by the Tarrawonga Agreement and the CFMEU to discuss the proposed changes to the mine plan, including the restructure and resulting redundancies, with them prior to the restructure being implemented.
Failure to Notify the CEO of Centrelink
28. At least 26 employees were made redundant by Whitehaven on 22 March 2013.
29. Whitehaven did not notify the Chief Executive Officer of the Commonwealth Services Delivery Agency (Centrelink) that it intended to dismiss more than 15 employees before doing so on 22 March 2014.
30. Whitehaven did not notify Centrelink because it was unaware of the requirement to do so.
31. Whitehaven is unaware of any loss suffered as a result of its failure to notify Centrelink.
No previous contraventions
32. Whitehaven has not previously engaged in conduct in contravention of sections 50 or 530 of the Fair Work Act 2009 or any other workplace relations legislation.
Entitlements and Compensation paid to employees
33. As noted above, all employees whose positions were made redundant were paid severance pay in accordance with the terms of their relevant enterprise agreement.
34. Further, as noted above, all employees listed in paragraph 6 of the Further Amended Statement of Claim were paid an additional amount of compensation as part of a confidential settlement arrangement between the CFMEU and Whitehaven.”
In joint submissions filed on 5 September 2014, the parties addressed:
a)the background to the matter;
b)the contraventions;
c)the applicable statutory provisions;
d)the agreement as to penalties and the role of the Court;
e)the principles applied in determining if the penalty agreed to is in the appropriate range;
f)the nature and circumstances of the conduct;
g)specific and general deterrence;
h)contrition and corrective action;
i)whether there was previous conduct by the respondent;
j)the loss or damage sustained as a result of the breaches; and,
k)whether the breaches arose out of one course of conduct.
Those joint submissions are as follows:
“Background
2. Whitehaven operates the Tarrawonga and Rocglen open cut coal mines (the Mines) in the Gunnedah Basin in New South Wales.
3. In early 2013, Whitehaven was facing a position where:
(a) it was losing $2 million per week,
(b) the Whitehaven Group had recorded a net loss after tax of $47 million for the year ending 31 December 2012, down from a profit of $19.9 million in the previous corresponding period;
(c) Rocglen and Sunnyside (another mine operated by Whitehaven until October 2012) profitability (EBITDA) went from a profit of $28 per tonne in January 2012 to a loss of approximately $14 per tonne in September 2012; and
(d) Tarrawonga profitability (EBITDA) went from profit of approximately $41 per tonne in January 2012 to a loss of approximately $7 per tonne in November 2012; and
(e) the average coal price was US$92 per tonne during the half year ending 31 December 2012, compared to US$108 in the previous corresponding period.
4. Accordingly, Whitehaven needed to review its operations and implement any cost saving initiatives as soon as practicable.
5. In light of this, local management at the Mines conducted a review of operations and developed a proposal to change the Tarrawonga and Rocglen mine plans to reduce the strip ratios (the Restructure). The strip ratio represents the amount of overburden that must be removed per tonne of coal being extracted. Reducing the strip ratio would then require less equipment and fewer employees while still maintaining existing coal production rates. Accordingly, if the Restructure was implemented, it would result in positions being made redundant.
6. However, before the Restructure could be implemented, it had to be approved by the Executive Manager of Open Cut Operations and both the outgoing and incoming Managing Directors/CEOs (the Senior Executives).
7. Accordingly, local management prepared proposals for different manning and equipment levels in the event that a decision was made to implement the Restructure. Although no decision had been made, local management were also required to take steps to be ready to move in the event that the Senior Executives made a final decision to give effect to the Restructure.
8. At 2.19 am on 22 March 2013, the Restructure was approved by the Senior Executives.
9. Once this confirmation was received, local management felt that they were under an immediate obligation to notify employees and to give effect to the Restructure and redundancies.
10. Clause 28 of the Whitehaven Open Cut Operations (Production) Collective Agreement 2009 (the Rocglen Agreement) and the Whitehaven Open Cut Operations (Maintenance) Employee Collective Agreement 2009 (the Maintenance Agreement) required Whitehaven to notify affected employees when it made a definite decision to introduce major workplace change. Clause 26 of the Whitehaven Open Cut Operations (Tarrawonga) Enterprise Agreement 2010 (the Tarrawonga Agreement) required Whitehaven to notify employees once a decision had been made and to consult with employees as to the nature of the change.
11. Accordingly, on 22 March 2013, all employees were then notified of the Restructure and 14 of the Employees covered by the Tarrawonga Agreement were also notified that their positions were redundant, effective immediately, as a result of the Restructure.
12. After employees were notified of the restructure, Whitehaven commenced discussions with the CFMEU in relation to the Restructure.
13. Given the ongoing losses being suffered by Whitehaven on a weekly basis, and the decision that was made on 22 March 2013, Whitehaven felt that it needed to implement the Restructure as soon as possible. Local management were also operating under a reasonable belief that under the Tarrawonga Agreement it was able to implement the changes and then consult with employees as to the affects.
14. However, Whitehaven accepts that they did not provide any opportunity to discuss the changes with the 14 employees covered by the Tarrawonga Agreement and the CFMEU prior to the changes being implemented.
The Contraventions
15. Section 50 of the Fair Work Act 2009 (FW Act) provides that a person must not contravene a term of an enterprise agreement.
16. As noted above, Whitehaven accepts that it did not consult in accordance with clause 26 of the Tarrawonga Agreement as it did not discuss any of its proposed workplace changes with its employees and CFMEU prior to the implementation of the restructure on 22 March 2013. It is agreed between the parties that this gives rise to one single contravention of section 50 of the FW Act.
17. Section 530(1) and (4) of the FW Act provides that prior to dismissing 15 or more employees for reasons of economic, technological, structural or similar nature, an employer must give written notice about the proposed dismissals to the Chief Executive Officer of the Commonwealth Services Delivery Agency (Centrelink). Whitehaven admits that it did not notify Centrelink before dismissing more than 15 employees on 22 March 2013. It is agreed that this gives rise to one single contravention of section 530(4) of the FW Act.
Applicable statutory provisions
18. In accordance with section 546(1) of the FW Act, the Court may, on application, order a person to pay a pecuniary penalty that the Court considers appropriate if the Court is satisfied that the person has contravened a civil remedy provision.
19. In accordance with section 546(2) of the FW Act, if the person is a body corporate, the pecuniary penalty imposed must not be more than five times the maximum number of penalty units referred to in relevant items in column 4 of the table in subsection 539(2) of the FW Act.
20. The Crimes Act 1914 provides that a penalty unit is $170.
21. In relation to a contravention of section 50 of the FW Act, the maximum number of penalty units is 60. Accordingly, the maximum penalty that may be imposed against a body corporate for breaching section 50 of the FW Act is $51,000.
22. In relation to a contravention of section 530(4) of the FW Act, the maximum number of penalty units is 30. Accordingly, the maximum penalty that may be imposed against a body corporate for breaching section 530(4) of the FW Act is $25,500.
23. In accordance with section 543(3) of the FW Act, the Court may order that the pecuniary penalty be paid up to a particular person.
Agreement as to penalties and the role of the Court
24. The CFMEU and Whitehaven have agreed that:
a. a penalty of $19,000 should be imposed on Whitehaven for the contravention of section 50 of the FW Act;
b. a penalty of $1,000 should be imposed on Whitehaven for the contravention of section 530(4) of the FW Act; and
c. the penalties should be payable to the CFMEU.
25. The role of the Court when giving consideration to an agreement between the parties as to the quantum of a penalty is well settled.
26. In Ministry for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 (Mobil Oil), a pecuniary penalty was sought to be imposed on Mobil. The parties had prepared an agreed statement of facts and also had reached an agreement as to the quantification of a penalty. When focusing attention upon the agreement as to penalty, Branson, Sackville and Gyles JJ referred to the decision of NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods) and continued:
“[51] The following propositions emerge from the reasoning in NW Frozen Foods:
(i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under section 76 of the TP Act in respect of a contravention of the TP Act.
(ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.
(iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravener have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submission as to the appropriate penalty to be imposed.
(iv) The view of the regulator, as a specialist body, is a relevant, but not determinate consideration on the question of penalty. In particular, the views of the regulator on matters within its precise expertise (such as the ACCC’s views as the deterrent effects of a proposed penalty in a given market) will usually be given greater weight than its views on more ‘subjective’ matters.
(v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of fact, the Court may act on that statement if it is appropriate to do so.
(vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have disposed to select some other figure. It will be appropriate if within the permissible range.”
27. In DP World Sydney Limited v Maritime Union of Australia (No 2) [2014] FCA 596 at 24, Justice Flick held that these principles continue to apply to civil penalty proceedings notwithstanding that a joint approach to penalty would not be appropriate in criminal (as opposed to civil) proceedings.
The principles applied in determining if penalty is in appropriate range
28. The principles to be applied in determining the appropriate penalty in cases such as these are well established by various case law including the Director of the Fair Work Building Industry Inspectorate v Construction Forestry, Mining and Energy Union [2014] FCA 160 at [32] – [33].
29. The relevant principles are addressed below.
The nature and the circumstances of the conduct
30. The Restructure was implemented at a time when Whitehaven urgently needed to make changes to its business in order to survive. It had recorded significant losses for the half year ending 31 December 2012, it was losing $2 million per week and trading conditions were continuing to deteriorate.
31. The final and definite decision to proceed with the Restructure was made by the Senior Executives on 22 March 2013. Accordingly, prior to this time, Whitehaven had not made a final decision to implement any major workplace change.
32. However, once approval was provided, given the challenging market conditions and financial pressures being faced by Whitehaven, it felt compelled to notify employees and implement the Restructure immediately.
33. In taking steps to prepare for the Restructure should it be implemented, Whitehaven had considered its obligations to consult and acted upon an honest and reasonable belief that clause 26 of the Tarrawonga Agreement permitted it to implement the Restructure without delay and as soon as practicable after it had notified employees, and that consultation was able to occur after the decision (the Restructure) was implemented.
34. Accordingly, when announcing the Restructure to employees, Whitehaven also notified the CFMEU and thereafter undertook discussions with employees and the CFMEU.
35. In light of the circumstances Whitehaven felt that announcing and implementing the Restructure on 22 March 2013 was an appropriate course to take.
36. However, Whitehaven accepts that the approach provided insufficient time to discuss and consult prior to the changes being introduced.
37. Whitehaven was unaware of its obligation to notify Centrelink before proceeding with the implementation of the Restructure, but accepts that it should have been aware of this obligation and should have notified Centrelink as required.
Specific and general deterrence
38. The agreed penalty of $19,000 for breaching clause 26 of the Tarrawonga Agreement is a sufficiently significant sum that it will act as a general deterrent and confirm the Courts condemnation of failing to consult appropriately in accordance with the requirements of an enterprise agreement.
39. It will also serve as a specific deterrent to Whitehaven from engaging in such conduct again.
Contrition and corrective action
40. Whitehaven admitted to the breach of section 530(4) of the FW Act in its defence to the original Statement of Claim filed by the CFMEU. Whitehaven also admitted to the contravention of section 50 of the FW Act in its Further Defence filed in response to the Further Amended Statement of Claim.
41. Whitehaven’s admissions were made prior to either party filing evidence as to liability and have avoided the need to hold a hearing to determine liability.
42. In coming to an agreement in relation to the penalties to be imposed, Whitehaven’s actions have also avoided the need to hold a hearing to determine the quantum of the penalty.
43. Whitehaven’s early admissions and the payment of additional compensation to affected employees (as discussed below) demonstrates remorse for its actions.
No previous conduct
44. Whitehaven has not previously contravened section 50 or 530(4) of the FW Act, nor has it contravened any other workplace relations legislation.
Loss or damage sustained as a result of the breaches
45. Employees whose positions were made redundant were paid all their statutory entitlements including payments in lieu of working their notice period and severance pay. Whitehaven also arranged for an employment consultant to assist those being made redundant to find future employment and agreed to provide a reference detailing the employee’s training and experience if requested.
46. In addition, as part of a confidential settlement arrangement, the employees listed in paragraph 6 of the Further Amended Statement of Claim were paid an additional amount of compensation.
47. Whitehaven is unaware of any loss suffered by the affected employees as a result of its failure to notify Centrelink.
One course of conduct
48. The breaches arose out of a course of conduct by Whitehaven in implementing the Restructure. This is agreed between the parties.”
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), the Court must be satisfied that any pecuniary penalty ordered for the contravention of a civil remedy provision is appropriate, including where the parties file with the Court agreed draft declarations and orders. To that end, I relisted the matter before me to raise the following issues with the parties:
a)The absence of any submission as to why any penalty should be paid to the applicant;
b)The absence of any submission as to why declarations should be made;
c)The Court’s concern that the penalty of $19,000, agreed to in relation to the admitted contravention of the Tarrawonga Agreement, may be manifestly excessive in circumstances where:
i)the respondent had no prior history of contraventions;
ii)had conceded liability;
iii)had taken steps to consult immediately following the announcement of the termination of the employees (such conduct being consistent with the respondent’s construction of the Tarrawonga Agreement and its obligation to consult);
iv)the payment of undisclosed compensation to the affected employees;
v)the agreement of the parties that there was an economic imperative on the respondent to take the steps that it did in terminating the employees;
vi)the cooperation of the respondent in agreeing facts and participating in joint submissions, including filing proposed declarations and orders; and,
vii)the fact that the agreed penalty of $19,00 is almost 40 percent of the maximum penalty of $51,000.
Subsequently, Further Joint Submissions were filed by the parties on 10 November 2014. Those submissions addressed the agreed position of the parties in the declarations sought and the payment of the penalty to the applicant. Those submissions are as follows:
“1. These are the Construction, Forestry, Mining and Energy Union’s (CFMEU) and Whitehaven Coal Mining Limited’s (Whitehaven) joint submissions in relation to the penalty to be imposed on Whitehaven for contravening sections 50 and 530(4) of the Fair Work Act 2009 (FW Act).
2. The Parties rely on the Statement of Agreed Facts and their agreed submissions as to liability and penalty filed with the Court on 5 September 2014.
Agreed Position of the Parties
3. The Parties restate that they have reached an agreed position on liability and penalty and submit that the penalties contained in the initial joint submissions be considered by the Court when imposing appropriate penalties in these proceedings.
4. In response to the comments made by the Court on 30 October 2014, both parties submit unequivocally that the agreement as between them as to the contraventions (which Whitehaven has admitted) and the penalties to be imposed was a genuine agreement. The agreement was reached in context of a settlement also being entered into between the parties in respect of 21 unfair dismissal applications in which the CFMEU was representing 21 employees whose employment had been terminated arising from the same set of facts. The settlement reflected an overall commercial settlement between the parties. There was no other promise or favour as between the parties and the settlement reflects a true compromise.
Declarations by the Court
5. The Parties seek that the Court makes declarations that the Respondent has contravened sections 50 and 530 of the Fair Work Act 2009 (“the Act”).
6. While the granting of declaratory relief by the Court is discretionary, it is sound public policy for that the Court makes a declaration that the Respondents have breached the Act.
7. As Logan J stated in Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v QR Ltd (2010) 198 IR 382 (“Queensland Rail case”):
The QR Agreements are not mere private contracts. The obligation to comply with their terms is a matter of Federal law. To contravene a term of those agreements is not to expose oneself to a civil liability for damages for breach of contract but to be in jeopardy of the imposition of a pecuniary penalty and the further relief for which the Fair Work Act provides. There is a strong public interest in the granting of declaratory relief.[1]
[1] Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v QR Ltd (2010) 198 IR 382 at para 154
8. As with the Queensland Rail case, the present proceedings deal with a failure by the relevant employer to comply with the consultation obligation under one of its applicable enterprise agreements. This was not just a contractual obligation, but an obligation under Federal law. It is agreed between the parties that the Respondent did not comply with this obligation as outlined in the parties’ earlier joint submissions.
9. It is agreed that a declaration would reinforce the Respondent’s obligations to its existing and future employees.
10. It is further agreed that the making of a declaration will also highlight to employers generally the need for compliance with all provisions of the Act, whether they are widely known or not.
Payment of the Penalty to the Applicant
11. The legislative scheme contemplates that civil penalty proceedings may be instituted by “common informers”, including employers, trade unions and employees: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (No 2) [2010] FCA 652 at [82]-[84] per Logan J.
12. Provisions such as s546(3) of the FW Act (which empower the Court to exercise a discretion to direct that penalties be paid to a common informer) recognise that, in industrial law, there is a “very particular benefit to the community” for proceedings to be brought by common informants, so that the need for adherence to obligations can be brought home more widely: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (No 2) [2010] FCA 652 at [83] per Logan J.
13. It has been held that an order for the payment of penalties to the common informer is the “usual order” where proceedings for the imposition of a civil penalty have been instituted by the “common informer”: Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223 per Gray J; CFMEU v Coal and Allied Operations Pty Ltd (No 2) [1999] FCA 1714 at [17] and [18] per Branson J; Australian Nursing Federation v Flinders Medical Centre [2002] FCA 1534 at [24] per Mansfield J; Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 672 at [8] per Merkel J; and Shanka v Employment National (Administration) Pty Ltd (2001) 114 FCR 379 at [77]–[87] per Moore J.
14. The initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons in upholding the integrity of the legislation the subject of penal proceedings: Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [44] per Gray J; and Lander and Branson JJ at [65].
15. The CFMEU is the common informer in these proceedings. It commenced these proceedings to enforce particular provisions of the Act and Enterprise Agreements made under that Act.
16. The CFMEU has a legitimate interest in enforcing the Enterprise Agreement with the Respondent. Its members are subject to the terms and conditions set out in the Enterprise Agreement. As members of the CFMEU are still employed by the Respondent, the Applicant has an ongoing interest to ensure that the provisions of the Enterprise Agreement are observed by the Respondent.
17. The Parties have agreed that it is appropriate to follow the “usual order” and for payment of the pecuniary penalty to be made to the Applicant.
Conclusion
18. The Court should make the Orders submitted for its consideration on 5 September 2014.”
The Further Joint Submissions do not address the concern of the Court that the agreed penalty for the contravention of the Tarrawonga Agreement may be manifestly excessive. However, the Further Joint Submissions restate the agreement of the parties as to penalties sought.
There is a real interest in facilitating cooperation between parties and giving effect to settlements reached by agreement (see NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; Ministry for Industry, Tourism and Resources v Mobil Oil Pty Ltd [2004] FCAFC 72 at [51] per Branson, Sackville and Gyles JJ).
Having raised my concerns about the size of the penalty with the parties, both parties have now assured the Court that the agreed penalty sought is appropriate, and was not made pursuant to any other promise or favour as between the parties and reflects a true compromise. Whilst in my view the sum is at the highest possible end of an appropriate penalty, I am prepared to give effect to the agreement of the parties of the penalties sought and agreed to in respect of the contraventions.
In relation to the declaratory relief agreed to by the parties, I accept that there is sound public policy in making such a declaration given the importance of an obligation to consult with employees before termination, as provided for in the Tarrawonga agreement.
I am less persuaded that the payment of the penalty should be made to the applicant rather than to Consolidated Revenue. Pursuant to s.546(3) of the Fair Work Act 2009 (Cth) the Court may order that a pecuniary penalty be paid to the Commonwealth, a particular organisation or a particular person.
I accept that the applicant commenced the proceeding to enforce particular provisions of the Fair Work Act 2009 (Cth) and the Tarrawonga Agreement made under that Act. I also accept that the applicant has a legitimate interest in enforcing the Tarrawonga Agreement with the respondent and has an ongoing interest in ensuring that the provisions of the enterprise agreement are observed by the respondent.
However, in the case before this Court, it is apparent from the Statement of Agreed Facts and the Joint Submissions that the applicant accepted that the respondent held a genuine belief that, on a proper construction of the Tarrawonga Agreement, it was not obliged to consult the employees prior to their termination. Certainly, that was so in respect of the other two enterprise agreements, as is reflected in the Agreed Facts and Joint Submissions.
In such circumstances, where there is a genuine issue of construction of an enterprise agreement, it is incumbent upon all parties at the time of entering into that agreement to ensure that the terms are as clear on their face as possible in order to avoid unnecessary litigation.
In my view, this is not a case where the penalties should automatically be paid to the applicant. However, in light of the agreement of the parties to the contrary and the orders that the Court is asked to make by consent, on balance, I accept that such an order should be made.
Accordingly, in all the circumstances, the draft declarations and orders agreed to by the parties should be made.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Emmett
Associate:
Date: 18 November 2014
1
11
0