Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd T/A Hutchinson Builders and Ors (No.2) - [2019] FCCA 402

FEDERAL CIRCUIT COURT OF AUSTRALIA

DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE v J HUTCHINSON PTY LTD T/A HUTCHINSON BUILDERS & ORS (No.2) [2019] FCCA 402

Catchwords:
INDUSTRIAL LAW – Commonwealth – Compliance and enforcement – Civil remedies – payment to employees during unprotected industrial action – whether payments must be voluntary

INDUSTRIAL LAW – Commonwealth – Compliance and enforcement – Civil remedies – assessment of appropriate penalty

Legislation:

Fair Work Act 2009 (Cth), ss.19(1), 323, 324, 338, 343, 345, 348, 349, 355, 362, 474, 500, 502
Workplace Relations Act 1996 (Cth), s.187AA

Cases cited:

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Postal Corporation (2010) 201 IR 363
Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd T/A Hutchinson Builders & Ors [2019] FCCA 401
Lisette Pine v Expoconti Pty Ltd [2005] FCA 1434
Pine v Seelite Windows [2005] FCA 500
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964
Ponzio v Maximum Electrical Services (AUST) Pty Ltd [2006] FCA 579

Applicant: DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE

First Respondent: J HUTCHINSON PTY LTD T/A HUTCHINSON BUILDERS

Second Respondent: MICHAEL MYLES

Third Respondent: MARK O’BRIEN

Fourth Respondent: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

File Number: BRG 894 of 2014

Judgment of: Judge Jarrett

Hearing date: 19 November 2015

Date of Last Submission: 12 November 2015

Delivered at: Brisbane

Delivered on: 22 February 2019
REPRESENTATION

Counsel for the Applicant: Mr Murdoch

Solicitors for the Applicant: Clayton Utz

Solicitors for the Respondents: Franklin Athanasellis Cullen
ORDERS
THE COURT DECLARES THAT:
(1)The first respondent contravened s.474(1)(b) of the Fair Work Act 2009 (Cth) on 12 December, 2013 when it made payments to 10 of its employees who had, on 9 December, 2013 participated in industrial action that was not protected industrial action for the purposes of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:
(2)Pursuant to section 545 of the Fair Work Act 2009 (Cth) the first respondent pay a pecuniary penalty of $1,200;
(3)The penalty payable pursuant to order (2) hereof be paid within 28 days to the Consolidated Revenue Fund of the Commonwealth.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE
BRG 894 of 2014

DIRECTOR, FAIR WORK BUILDING INDUSTRY INSPECTORATE
Applicant
And

J HUTCHINSON PTY LTD T/A HUTCHINSON BUILDERS
First Respondent

MICHAEL MYLES
Second Respondent

MARK O’BRIEN
Third Respondent

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
Fourth Respondent
REASONS FOR JUDGMENT

Section 474(1) of the Fair Work Act 2009 (Cth) provides (and provided at the relevant time):
474 Payments not to be made relating to certain periods of industrial action
(1) If an employee engaged, or engages, in industrial action that is not protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to:
(a) if the total duration of the industrial action on that day is at least 4 hours—the total duration of the industrial action on that day; or
(b) otherwise—4 hours of that day.
Note: This subsection is a civil remedy provision (see Part 4‑1).
The issue presented by these proceedings is whether proof of a contravention of s.474(1) requires proof that the employer intentionally made a prohibited payment to an employee who had participated in relevant industrial action. In the present proceedings it is uncontroversial that 10 of the first respondent’s employees engaged in industrial action that was not protected industrial action on 9 December, 2013. It is also uncontroversial that by reason of s.474(1) the first respondent was not to make a payment to those employees in relation to four hours of that day. That is to say, the first respondent was required to dock the wages of each of the employees who engaged in the unlawful industrial action, four hours wages on that day.
It is also uncontroversial that the first respondent did not initially do so and when the relevant employees received their wages for 9 December, 2013 (which were paid on 12 December, 2013) they were paid for the whole of 9 December, 2013 without deduction. The first respondent says that the payment occurred by accident or mistake and that it was subsequently remedied by deductions from the employees’ wages that were made in April and May, 2014.
Some background facts are necessary. In December, 2013 the first respondent was the head contractor on a construction project known as Arena Apartments located at Edmondstone Street, South Brisbane. The project was the construction of a multi-storey residential tower containing 191 residential apartments and ground level retail outlets.
On 9 December, 2013 the first respondent employed 14 people to work on the construction project as construction workers of various descriptions. There was, at the time, a current enterprise agreement called the J Hutchinson Pty Ltd T/A Hutchinson Builders and CFMEU Union Collective Agreement 2011-2015 in place. The enterprise agreement had been approved by the Fair Work Commission, had a nominal expiry date for the purposes of the Fair Work Act of 31 March, 2015 and covered the first respondent, its construction employees and the fourth respondent, the CFMEU.
The first respondent carried out some of the work it was obliged to perform on the project using its own employees and subcontractors. On 9 December, 2013 there were at least six subcontractors, each with their own employees, who were performing building and construction work at the project.
To be considered eligible to perform work for the Queensland Government, a contractor like the first respondent needed to be compliant with the Queensland Government Implementation Guidelines for the Queensland Code of Practice for the building and construction industry. To demonstrate compliance, the first respondent organised for investigators from the Building Construction Compliance Branch of the Queensland Government to audit the first respondent’s compliance with the Code. Those investigators were Mr Nathan Wilson and Mr Robert Northey.
The investigators attended at the project site at approximately 9:40am on 9 December, 2013. When they attended, the site was operational. Building and construction work was being undertaken on the site by some of the first respondent’s employees and employees of some of the first respondent’s subcontractors.
At approximately 11:00am, all but four of the building and construction employees employed by the first respondent ceased work – 10 in total. They went to the lunch room where they remained for about 45 minutes. They were directed to cease work and go to the lunch room by the second and third respondents acting in their capacities as officers or organisers of the fourth respondent. The employees only returned to work when they were directed to do so by the second and third respondents. That direction came after the QBBC inspectors had left the construction site.
The actions of the second and third respondents was a breach of s.417(1) of the Fair Work Act for which the fourth respondent was also liable. I have separately made orders against the second, third and fourth respondents for those contraventions: Director, Fair Work Building Industry Inspectorate v J Hutchinson Pty Ltd T/A Hutchinson Builders & Ors [2019] FCCA 401.
The first respondent’s employees did not have permission from the first respondent to cease work at 11:00am on 9 December, 2013 in the circumstances I have just described. The parties agree that by ceasing work in the circumstances in which they did, the employees engaged in industrial action as that phrase is defined in s.19(1) of the Fair Work Act 2009 (Cth). They also agree that it was not protected industrial action for the purposes of s.474(1) of the Fair Work Act.
The first respondent argues that to contravene s.474(1) of the Act, the offending payment or payments by the employer must be made voluntarily. A payment made by “accident” or “mistake” would not lead to a contravention of the Act. However, I reject that argument. Contravention of s.474(1) of the Act does not depend upon the intention of the employer when it makes the offending payment. The text of the subsection does not provide for that result. The words “must not make a payment” demonstrate that intention is not required. They are words of absolute prohibition. There are other reasons.
The parties are agreed that the policy of the Act is to discourage industrial action. Subsection 474(1) is intended to prevent an employer making a payment to the employer’s employee in relation to any period during which the employee engages in industrial action. The policy of the Act is that if an employee engages in industrial action then it must be at the employee’s own expense. That these matters were not in contention is not surprising given the authorities that bear upon the policy of s.474(1) and its predecessors: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Postal Corporation (2010) 201 IR 363. The notion that a payment made by “accident” or “mistake” would not contravene s.474(1) does not sit well with the policy of the subsection.
Further, where intention is an element of conduct proscribed by the Fair Work Act, the relevant provision says so. Thus, for example, s.343 provides that a person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce that other person to do or not to do certain things. Section 500 provides that an entry permit holder exercising, or seeking to exercise certain rights in accordance with the Fair Work Act must not intentionally hinder or obstruct any person, or otherwise act in an improper manner. There are other provisions where intention is plainly required: see ss. 338, 345, 348, 349, 355, 362, and 502.
Further, many of the cases to which I was referred on the question of penalty (set out later in these reasons) dealt with payments made by respondent employers to their employees inadvertently. Those cases all dealt with s.187AA of the Workplace Relations Act 1996 (Cth). For present purposes, that section is in substantially similar terms to s.474(1) of the Fair Work Act. If it was the case that it was necessary for the relevant payment to be voluntary in the way in which the first respondent argues, then it seems surprising that the court in each of those cases would have accepted admissions of liability to breaches of s.187AA. Indeed, in Ponzio v Maximum Electrical Services (AUST) Pty Ltd [2006] FCA 579 Ryan J said:
13. I regard the liability imposed by this Act as being strict in the sense that a lack of awareness that a particular stoppage of work amounted to industrial action as defined does not constitute a defence.
I am satisfied, that on its proper construction, s.474(1) of the Fair Work Act does not require proof that the employer making the impugned payment intended to make the payment either in contravention of that subsection, or at all. A contravention of that section is complete when an employer makes an offending payment to an employee who has engaged in industrial action that is not protected industrial action. The employer’s intention is irrelevant to the commission of the contravention.
In the event that I am wrong about that and it is necessary for the applicant to demonstrate that the offending payments were made by the employer voluntarily, it is necessary to consider the evidence bearing on that issue.
Ms Penny Carter was a Workforce and Industrial Relations Officer employed by the first respondent on 9 December, 2013. Her evidence was that the first respondent’s weekly payroll period was calculated from Wednesday to Tuesday each week. That meant that all employees were required to submit their timesheets by 10:00am each Tuesday.
Ms Carter’s evidence was that as 9 December, 2013 was a Monday, she was conscious of the payroll closing for the processing of pays for the period that covered the 9 December, 2013. She went to speak to the first respondent’s managing director Mr Greg Quinn about making pay deductions from the wages of the 10 employees who participated in the work stoppage. Her evidence was that she was aware that a deduction of a minimum of four hours pay for each employee who had participated in the stoppage on 9 December 2013 was required.
Ms Carter also gave evidence that on 10 December, 2013 she spoke with Mr Quinn in his office about the industrial action that occurred on the previous day and the requirement to deduct a minimum of four hours pay from those employees who were involved. She says that the conversation lasted about five minutes, at the end of which Mr Quinn got up and said words to the effect, “I have to go and tell John to make sure the deductions are made”. Ms Carter thought that Mr Quinn was referring to Mr John Berlese.
Mr Gregory Quinn was the managing director of the first respondent at all times relevant to these proceedings. His written evidence concerning the pay issue was also short:
7. It wasn’t until sometime later in the day (9 December 2014) and possibly after 4pm that I first became aware that there had been a problem on the Site. I recall sitting in a meeting room with PK when PK opened our conversation by saying something like “It didn’t go well.” PK told me that the Unions turned up on site. Subsequently we talked about various matters including reporting of the event to Fair Work Building and Construction and, generally ensuring we did all things necessary to ensure BCCB was satisfied including payment to Workers - both our own and our Subbies. I was of the misunderstanding that we should deduct 1 ½ hours pay however PK informed me that there was a minimum deduction of 4 hours pay that applied in the case of employees taking unprotected industrial action that was less than 4 hours long. PK and I agreed we needed to deduct our Workers’ pay.
8. Immediately after speaking with PK I went directly across the car park to see John Berlese, Team Leader (John) in his office. John was in charge of the Arena project and had responsibility for actioning the directive to ensure that the deductions occurred. I actually ran into John on my way to his office. We met in the car park between our two buildings. I remember saying to John that we were under scrutiny and that John needed to make sure we deducted 4 hours pay from everyone who took industrial action that day regardless of the fact work only ceased for 1 ½ hours and how this might be perceived by the Workers.
9. John reiterated what had happened on the Site and we finished the conversation. It was only a minute or two conversation. I then walked back to my office.
The references to “PK” in that evidence are references to Ms Carter.
Mr Quinn’s evidence in cross-examination was different to that set out above. He said that he first became aware of the requirement to deduct an amount from the workers’ wages on 10 December, not 9 December as he had said in his affidavit. He said that she told him of the requirement in his office rather than a meeting room. He said that he thought that two and a half hours’ worth of wages needed to be deducted rather than one and a half. So too, in cross-examination Mr Quinn said that his meeting with Mr Berlese took place on 10 December, rather than 9 December.
However, there is evidence that on 20 December, 2013 Mr Quinn wrote to the Building Construction Compliance Branch of the State of Queensland, and said, inter alia, that:
I refer to the stoppage on the above project on 9 December 2013. The duration of the stoppage was approximately two hours including a half hour lunch break.
Our Project Team was briefed by me and our Workplace Relations Manager PK Wilson on the action to be undertaken, in particular that under no circumstances were Hutchies’ workers to be paid for the duration of this stoppage. I must admit that despite the unlawful component of the stoppage equating to 1 ½ hours, I was not aware that 4 hours pay should be deducted until sometime later. Our Team was also instructed to inform Subcontractors of their obligations not to pay their respective Workers. We confirm that our Jai Sessarago did inform the Subcontractors.
In cross-examination, Mr Quinn said that the reference in that letter to “Project Team” was in fact the reference to Mr Berlese and no one else. He said that the phrase “until sometime later” used by him in reference to when he found und out about the requirement to dock workers’ wages by four hours rather than for the time of the unprotected industrial action was a reference to Ms Carter telling him about that requirement. That does not sit comfortably, however, with his evidence in his affidavit that he was told of that requirement by Ms Carter on the day of the stoppage or, having regard to his cross-examination, the next day.
On 13 February, 2014 Mr Quinn met with Ms Sharon Wolff and Mr Steven Lovewell of the applicant’s office. In the course of that interview, he said:
MR QUINN: To be honest, I didn’t actually know at- at the time, and that’s as recently as 21st – 20th or maybe even 23 December about the four hours. I would’ve - I would’ve heard it but I - I wouldn’t have taken it on board. So in my mind we’re talking an hour and half, which is a much easier number, when you convert it to dollars and cents - - -
MS WOLFF: Yep.
MR QUINN: - - - to take out, but PK Wilson, in January some time – latish January, after the 20th at least, of January- said, “No. No, Greg. It’s not an hour and a half.” We were talking about when we were going to do it, how we’re going to do it, what our process is going to be, and she said, “It’s four hours,” and that’s when I realised that it was four hours. But once I realised it was - it was four hours, I’ve seen it written and I’ve heard it so many times since, I- I should have known. I just didn’t - it didn’t register with me until then.
It is difficult to know what to make of the statements. On the one hand, the suggestion that Mr Quinn did not know “at the time” about the necessary deductions having to be made “as recently as 21^st – 20^th or maybe even 23 December” is entirely inconsistent with both his affidavit evidence and the answers he gave in cross-examination. On the other hand, he reiterates to Ms Wolff that he “would have heard it but I – I wouldn’t have taken on board”. Further, his reference to PK Wilson telling him something in January “sometime – latish January, after the 20^th at least, of January” must be incorrect having regard to the letter that he wrote on 20 December, 2013 which clearly refers to the necessity of deducting four hours pay from the relevant workers. Perhaps the reference to “January” is a mistaken reference and it ought to have been a reference to “December”.
Mr Quinn was cross-examined about the statements and their apparent inconsistency with his other evidence. His attempts to explain what appears on the face of the record of interview were unconvincing.
Mr Quinn was also asked about his understanding of strike pay and he said the following:
MS WOLFF: So, Greg, I’m just going to talk a little bit now about strike pay. So could you tell me what your understanding of strike pay is?
MR QUINN: My understanding is that under the Fair Work Act that we’re obliged not to pay workers for illegal industrial action or while standing down on illegal industrial action. In fact, I don’t really know the sections but I’ve- I’ve read it just recently- I think it’s section 52- only- only in the press, I’m not that close to industrial relations legislation to - to - - -
MS WOLFF: Yeah.
MR QUINN: - - - to actually know that, and as I said a little earlier, that is the practice, and I have been selling it strongly with our teams here, albeit without follow-up enforcement, which is fairly typical of our autonomous structure that under no circumstances do we pay. On this occasion, our John Berlese assumedly has - has taken the - the pragmatic call and said, “This will cause so much drama on our- on our site to not pay,” what he would refer to - he didn’t - hasn’t said this to me - refer to as, “a measly hour and a half’s pay. Let’s just get on with business, and we’ll hobble into Christmas, and when we’re ready to do this, and take the strong action that we know is needed to be taken in the future, we will be ready for 15 whatever fallout occurs.” So he has taken a pragmatic position.
It was genuinely against my instruction globally within the company for the last six months but particularly on - on this job. When I realised it, like maybe the 18th or 19th of December - it might have even been closer to Christmas Eve – when 20 inspectorate officers came in to obtain payroll records, etcetera, etcetera, which we organised to be handed over, it became pretty clear to me that we had paid. I had to go down and check. In fact, I can remember on whatever morning it was - I – I guess I could work it back if it was pertinent - standing with payroll for maybe an hour, which, to be honest, I can’t remember ever having done before, but on this occasion it was because I - I knew it was the wrong thing and we were in the - in the spotlight, so I was interested to - to see what the hours were, but clearly we had paid the money.

Remarkably, Mr Quinn did not tell Ms Wolff or Mr Lovewell (who was also present at the interview) that he had given Mr Berlese a specific instruction about the strike pay on this particular occasion. Rather, he talks about an assumption that he had made which seems to be at odds with Mr Quinn’s claim that he gave Mr Berlese a clear instruction on either 9 or 10 December, 2013 in relation to docking the pay of the relevant workers. Further, Mr Quinn tells the applicant’s officers that there was an instruction “globally within the company for the last six months” presumably about strike pay. In his affidavit evidence before this Court, there is no evidence at all about any global instruction as suggested by Mr Quinn.
I can comfortably find, I think, and I do find that Ms Carter spoke to Mr Quinn about the requirement to not pay strike pay to the workers involved in the relevant stoppage. I am not satisfied on the balance of probabilities, however, that the conversation took place on 9 or 10 December, 2013 as Mr Quinn and Ms Carter suggest. Whilst there may have been a conversation between Ms Carter and Mr Quinn about strike pay on one or other of those days, having regard to what Mr Quinn said in his letter of 20 December, 2013 and the statements that he made to the applicant’s inspectors in March, 2014 it is more likely that the conversation was general in nature and there was no specific mention that the amount not to be paid to the workers engaged in the stoppage was the equivalent of four hours wages.
I accept Mr Quinn’s evidence that he spoke to Mr Berlese on either 9 or 10 December, 2013 about not paying the workers for the period of their stoppage. I do not accept that Mr Quinn told Mr Berlese that the employees were not to be paid for four hours. It is more likely, it seems to me having regard to Mr Quinn’s letter and his statements to the applicant’s inspectors, that the instruction he gave to Mr Berlese was to deduct wages from the employees involved in the stoppage equivalent to 1 ½ hours – the period of the stoppage as far as Mr Quinn was concerned.
Mr John Berlese was a team leader employed by the first respondent on 9 December, 2013. He reported directly to Mr Quinn. In his affidavit filed on 25 February, 2015 Mr Berlese says, “I believe that the workers, including those Hutchinson Builders’ employees who stopped work, were paid for that day without any deduction for any period of time that they did not work.” He did not suggest that they were paid by mistake. In his second affidavit filed on 4 September, 2015, Mr Berlese gives further evidence about the pay issue. It is short and I set it out in full:
Pay deduction
11. I am aware that Hutchinson Builders was required to deduct four hours pay from those Hutchinson Builders employees who were at the Arena Site and stopped work without permission on 9 December 2013.
12. I recall that Mr Quinn and I had a conversation about it at around this time and Mr Quinn advised to make sure that pay deductions of four hours were made to those employees.
13. I can’t recall where exactly that conversation occurred or exactly when. But I do remember being told by Mr Quinn about making the pay deductions for 9 December 2013 at around this time. We discussed it several times as I recall but I am not able to say exactly where and when we first talked about deducting four hours pay.
14. For whatever reason, I don’t recall, but Mr Quinn’s instruction wasn’t followed up. As a result the relevant Hutchinson Builders employees’ pays were not deducted four hours for the pay period that covered 9 December 2013.
15. I am aware, however, that those Hutchinson Builders employees who stopped work without permission at the Arena Site on 9 December 2013, have since had four hours pay taken out of their pays.
Mr Berlese was asked about these matters in cross-examination. His evidence was even less helpful than that in his affidavit (T35 – T36):
Now, can I ask you to go to paragraph 11 of your affidavit, please? You say there that you are aware that Hutchinsons Builders were – was required to deduct four hours’ pay from those Hutchinson Builders employees who were at the arena site and stopped work without permission on 9 December. Can you tell the court, please: when did you become aware of that requirement to deduct four hours?   By memory, in relation to – Greg came across and spoke to me on or around about when the incident occurred, that we need to do this.
Do what?   To deduct.
Deduct what?   The alleged strike pay.
Right, and how much had to be deducted?   I can’t recall back then.
So you can’t recall what you were told by Mr Quinn, you say, to deduct?   That’s correct.
Now, you are now aware, though, aren’t you, that – and if you’re not, tell the court – but could I suggest that you are now aware, as you sit here today, that four hours’ pay that was supposed to be deducted from those employees’ pay wasn’t deducted?   That’s correct. I understand that now. That’s correct.
Yes. And do you know how it was that that four hours wasn’t deducted?   How it wasn’t deducted?
What – do you know why it was that the four hours wasn’t deducted?   I can’t answer that, no. I don’t know why it wasn’t deducted. Can we just – just go back for a sec? So are you asking me – I just want to clarify that question you’ve asked me – why it wasn’t deducted? Is that
Do you know why the four hours wasn’t deducted?   Because the instruction was given me to deduct. Then I actually didn’t follow through with that instruction.
So you knew you had to deduct something?   No, I didn’t know at that time.
You didn’t know at what time?   At the time of the 9th that you’re referring to.
Right. But you became aware at some stage thereafter that you had to deduct something?   Correct.
And when was that?   When Greg advised me of the situation that needed to be deducted.
And you just didn’t do anything about that?   I just didn’t do anything about it.
Even though you had been told by Mr Quinn to do something?   That’s correct.
Mr Berlese participated in an interview with Inspector Wolff and Inspector Padroth on 24 January, 2014. During that interview, the following exchange occurred:
MS WOLFF: Okay. What’s your understanding of strike pay?
MR BERLESE: If you strike, it’s -you’re not entitled to be pay. I learned after the event that if you strike, whatever it may be, you’re not entitled for four hours to pay. I know that now, but didn’t know that at that particular time.
Mr Berlese was asked about this matter in cross-examination:
Now, could I ask you, please, to go to page 16? And if you go, please, to about line 25; you were asked about what’s your understanding of strike pay. Do you see that?   I see that, line 25. Yes.
And you say, “I learned after the event that if you strike, whatever it may be, you’re not entitled to four hours’ pay. I know that now but I didn’t know that at that particular time.” So I take it that what you are saying there is that you weren’t aware of the requirement to deduct four hours’ pay back on 9 December. Correct?   Correct.
Yes. And you had become aware of that some time later?   In that day, correct.
In what day?   Beg your pardon?
On what day?   Which day are you referring to?
Well, you said, “In that day.” What     ?   In that day.
What day are you talking about?   The day – in relation to this
Yes?         the day is not just the first – not just – in that day, in that afternoon I was aware of that.
Afternoon of what day?   Well, the day being the Monday.
So you say you became aware of the four hours requirement on the Monday?   No.
I beg your pardon. You became aware of the four hours requirement when you were interviewed by Ms Wolfe?   No.
No? Well, what – what day did you become aware of it?   The day that Greg told me about it.
Right. So where did Greg tell you about the four hours?   Either the Monday or the Tuesday.
I suggest to you that he didn’t tell you about the four hours at that time?   Is that a question or
Yes?   Well, I’m telling you he has.
Beg your pardon?   Beg
I suggest to you he didn’t tell you about it at that time?   Okay. That’s – that’s
Well, what’s your response?   Well, I disagree with that.
Now, if you go to line 30, you say there – you are asked there, “Are you aware of the workers being paid at the time that they stopped work?” And you go on to say, “Don’t know. Can’t comment. I don’t know.” So is it the case that when Ms Wolfe and Ms Padroff interviewed you, that at that time you had no awareness as to whether or not the workers had been paid for the time they had stopped work?   That’s correct.
Whilst I accept that Mr Quinn and Mr Berlese had a conversation about not paying the workers who participated in the stoppage on 9 December 2013 some of their wages, I am not satisfied by Mr Berlese’s evidence that there was any discussion that the amount to be deducted should be four hours pay. Having regard to Mr Quinn’s evidence and Mr Berlese’s evidence as I have set out above, I think it more likely that the conversation that they had was about deducting an amount of pay equivalent to the period of the stoppage.
Notwithstanding the inconsistencies in Mr Quinn’s evidence and Mr Berlese’s evidence, the upshot of the evidence is that Ms Carter, Mr Quinn and Mr Berlese were alive to the requirement to “deduct” an amount of wages from the relevant employees because they had participated in the stoppage. According to the evidence of Mr Quinn and Mr Berlese, implementing that was left to Mr Berlese. The evidence of Mr Berlese is the only evidence that bears upon why the payments were made. In that regard, the highest his evidence gets is an assertion that, “For whatever reason, I don’t recall, but Mr Quinn’s instruction wasn’t followed up.” In cross-examination Mr Berlese said “I just didn’t do anything about it”.
The first respondent’s argument is that the payment that was made to the employees involved in the stoppage was not made voluntarily or was made by “mistake” or “accident”. The evidence does not establish any of those matters. If the payments were made by “mistake” one would expect to see evidence of the nature and extent of the mistake and who made it. There is none. Nor is there any evidence that the payment was made by “accident” if indeed a payment could be made by accident at all. At best, Mr Berlese says that he did not do what he was asked to do by the managing director. He offers no explanation for his failure to act in accordance with what he says was Mr Quinn’s instruction.
The first respondent’s witnesses gave uniform evidence about the way in which its employees were paid. Workers such as those involved in the stoppage in this case would complete timesheets on a weekly basis. Those timesheets would be signed off by the employees and given to their foremen. The foreman would then arrange for the timesheets to be given to the payroll office. The cut-off for the giving of timesheets and the processing of pays was 10:00am each Tuesday. Once the timesheets have been completed by the employees concerned, they cannot be changed except by either Mr Quinn or Mr Berlese. Upon receipt of the timesheets, the employees’ pays are processed by the payroll office.
Mr Berlese did not say whether he passed the instruction that he received from Mr Quinn on to any person within the first respondent’s payroll office or to the first respondent’s payroll manager, Gaylene Finch. Cross-examination established that Ms Finch was still the head of the first respondent’s payroll department at the date of the hearing and that as far as Mr Quinn knew she was working that day. Ms Finch did not give evidence.
Nobody from the payroll office gave evidence. Thus, whilst the evidence might establish that Mr Quinn gave certain instructions to Mr Berlese who passed them on to Ms Carter or Mr Quinn gave instructions or talked to Ms Carter about deductions, there is no evidence that those instructions were ever passed on to the pay office.
Thus, to the extent that the first respondent’s intention might be represented by the intention of its servants or agents who were processing the pays in the payroll office, it could not be suggested that they did not intend that the relevant employees would not receive the whole of their wages for 9 December, 2013. The payments were, in that sense entirely voluntary and intentional.
Conclusion – liability
I reject the first respondent’s contention that the applicant is required to prove that the offending payments upon which he relies to establish a breach of s.474(1) of the Fair Work Act were made voluntarily by the first respondent and were not made by reason of some “mistake” or “accident”. The evidence here establishes that the first respondent made payments to workers who had engaged in industrial action which was not protected industrial action in contravention of s.474(1) of the Fair Work Act.
In any event, even if it is necessary for the relevant payments to have been made voluntarily as the first respondent submits, I am satisfied that the payments in this case were so made. They were not raided by reason of a “mistake” or “accident” as contended for by the first respondent.
I find the contraventions alleged against the first respondent proved. It is appropriate to declare that the first respondent contravened s.474(1)(b) of the Fair Work Act on 12 December, 2013 when it made payments to 10 of its employees who had, on 9 December, 2013 participated in industrial action that was not protected industrial action.
Penalty
The first respondent submitted that the offending conduct in this case is similar to that in Pine v Seelite Windows [2005] FCA 500. In that case the respondent’s workers were performing work at a block of apartments that were being constructed in Melbourne. On two consecutive days a number of those employees engaged in industrial action at the worksite. Their action followed the death of a labourer on an unconnected and unassociated worksite. Nevertheless it led to a stop work, while a site safety audit was conducted by union officials. In breach of s.187AA of the Workplace Relations Act 1996 (Cth) four workers who had engaged in the industrial action were paid their wages for the two days totalling $656.72. About half that amount covered the period of the industrial action. The respondent’s foreman did not inform the respondent’s managing director that the employees had not worked on the two days on which the stoppage occurred. The failure to inform the managing director was in breach of the foreman’s instructions. Had the managing director been told he would have instructed the pay office to dock their pay to ensure that s.187AA was complied with. Finkelstein J dealt with the case in this way:
Should I impose a penalty on the respondents? No harm has been done to anyone. The contravention was inadvertent. It is unlikely to occur again. The amount of wages involved is insignificant. In these circumstances it would be quite wrong to punish the respondents. Nothing would be achieved by the imposition of a pecuniary penalty. There is no need for a specific deterrent: it is simply not necessary. And if any penalty were imposed it would be so low that it could not act as a general deterrent.
The first respondent also referred me to Lisette Pine v Expoconti Pty Ltd [2005] FCA 1434. The facts of the case arose out of the same event which precipitated the proceedings in Pine v Seelite Windows, namely the death of a labourer on a worksite which was unconnected with the work being performed by the respondent Expoconti Pty Ltd. It had workers undertaking work on two unconnected building sites. Those workers participated in stoppage action following the labourer’s death and unconnected worksite. The respondent, however, continued to pay its workers without deduction notwithstanding the stoppage. Kenny J said:
9. There is a real question whether any penalty should be imposed in this case. The applicant submits that a penalty is appropriate and referred to the legislative history and purpose of the statutory scheme, as well as the recent decision of Merkel J in Multiplex. No penalty was imposed, however, in Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500, Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733 (“Firebase”) and Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964 (“D and E Air Conditioning”). Those cases are like this case in that they all involved an application for a penalty for contravention of s 187AA following an employer paying wages to its employees in respect of periods in August 2003 when those employees engaged in industrial action as defined in the Act on building and construction sites following Mr Schouten’s death in Shepparton. The respondent submits that no penalty is appropriate in this case.
Her Honour went on to consider the similarities and differences between the case before her and those referred to in the passage above. She concluded that notwithstanding that the case before her involved payments to 28 employees at two sites in respect of periods of industrial action over two days, no penalty was appropriate. The payments made to the relevant workers totalled a little less than $3,500 and at the time they were made the respondent believed there was a safety issue preventing its employees from working. There was an absence of harm as a result of the stoppages and the respondent had no prior contraventions of Part VIII of the Workplace Relations Act. There was evidence that it had since changed its policy to prevent recurrence of the conduct. There was also an early admission of the contraventions by the respondent who had cooperated with the applicant in dealing with the matter efficiently. Her Honour concluded that there was little likelihood that the respondent would repeat the contravening conduct. She also took into account that the respondent had incurred significant costs in defending the proceedings.
Just as the first respondent referred me to cases which demonstrated that no penalty was appropriate, the applicant referred to some decisions in which a penalty was imposed upon the respondent employer: e.g. Ponzio v Maxim Electrical Services (Victoria) (above).
Counsel for the applicant sought to distinguish the cases in which no penalty had been imposed from the present case by pointing out that the first respondent has not provided any explanation for its conduct. Whilst I am satisfied that Mr Quinn spoke to Mr Berlese about docking the relevant workers’ pay, there is really no evidence about why that did not happen other than Mr Berlese’s assertion that he did not follow it through or follow it up. It is of some moment, I think, to observe that Mr Quinn’s own explanation to Inspector Wolff was that Mr Berlese probably made a decision to pay the workers for the sake of harmony on the project site. The making of such an assumption seems inconsistent with the proposition that there has been a clear direction given which, given the chain of authority, should have been followed. Whilst I do not make a finding that Mr Berlese made such a decision, the fact that Mr Quinn assumed that as an explanation for what occurred, highlights that there really is no evidence by way of explanation for the first respondent’s conduct.
The evidence demonstrates that the first respondent put in place steps in April, 2014 to retrieve from the employees the money that has been wrongly paid to them in respect of the stoppage. That, of course, cannot amount to a defence to the contravention, it being complete upon payment of the relevant amounts to the employees concerned. However, in my view, it is something which goes to penalty because the policy of s.474, to which I have referred above is given some effect. The applicant suggests that by taking the action that it did the first respondent engaged in further contraventions of the Fair Work Act (specifically ss.323 and 324) but the first respondent has but not being taxed with those contraventions and, in my view, nothing more needs to be said about.

There is a separate contravention of s.474(1) in respect of each payment to each individual employee. That is to say there are 10 contraventions. The parties agree that the maximum penalty in respect of a contravention of s.474(1) is $51,000. Thus the total maximum penalty that might be imposed upon the first respondent in the present case is $510,000.
The provisions of s.557(1) of the Fair Work Act do not apply in this case because s.474(1) is not prescribed by s.557(2) of the Fair Work Act. However, the contraventions all arose out of the same course of conduct and they were committed by the same person namely the first respondent. In those circumstances, it is appropriate to impose a pecuniary penalty (if one is appropriate at all) for one of the contraventions and no penalty for the other nine. I approach the imposition of penalty in this case on that basis.
The contraventions involved 10 employees. The amount improperly paid to those employees was about $1,300. The applicant submitted that notwithstanding the modest amount that was paid to the employees wrongly, what is important is to recognise that the policy of s.474(1) of the Act was thwarted by the first respondent’s conduct. It was not suggested that any party suffered any particular loss by reason of the first respondent’s contraventions.
Mr Berlese, who was ultimately responsible for the payments being made through his failure to follow up a direction from Mr Quinn, occupied a senior managerial role in respect of first respondent’s business structure.
Whilst the first respondent’s witnesses, Mr Quinn and Mr Berlese cooperated with the applicant by participating in recorded interviews, these proceedings comprised a contested liability hearing. It cannot be said, in my view, that the matter has proceeded by way of agreement between the parties or that the first respondent is apologetic or contrite about the contraventions.
Mr Quinn gave evidence that since April, 2014 “there have been quite a few events of unprotected industrial action”. He put the number of occasions at about 25 and gave evidence that “on every one of those occasions deductions have been made in the very next pay run”. I take that matter into account. It demonstrates that the need for specific deterrence in the present case is very low. It was not suggested that the first respondent has been found to have contravened the Fair Work Act in any respect relevant to these proceedings on any other occasion.
Penalty – Conclusion
The purposes to be served by the imposition of a pecuniary penalty upon a party who contravenes the Fair Work Act are threefold: punishment, deterrence, and rehabilitation. In my view, the making of the declaration I have earlier set out provides a public record of the first respondent’s contraventions of the Act. Given the nature and extent of the relevant contraventions as I have set them out above, the making of the declaration against the first respondent serves the purpose of punishment. The facts of the case do not tend to suggest that any particular attention needs to be addressed to the question of rehabilitation or specific deterrence. The matters I have referred to above point towards a conclusion that there is little purpose to be served in this case imposing any penalty at all. There is no particular need for specific deterrence and the nature and extent of the contraventions in this case is very limited. There is, however, a question of general deterrence which is always a relevant consideration.
In Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964 North J considered the role of general deterrence in a case not too dissimilar from the present. His Honour said:
If a penalty were to be appropriate then something in the region of about $1000 might be appropriate. But would that act as a general deterrent to employers? If they contravened the section they would incur the burden of legal costs far in excess of that sum in defending an application such as this.
Given the nature of the breaches, the record of the respondent, its subsequent conduct and the amount of disadvantage already suffered, I do not regard the imposition of a penalty as serving the purpose of either particular deterrence or general deterrence.
Considering all the matters put to me, the appropriate order in this case is for the Court [to] make the declaration sought but otherwise to impose no penalty.
In that case, however, there was evidence, or at least agreement between the parties, that the employer has incurred a cost on the project of $4,966 arising from the industrial action and has incurred the legal costs of between $8,000 and $10,000 of the proceedings. His Honour took those matters into account as consequences to the employer respondent which might be taken into account in determining whether a penalty ought to be imposed.
In the present case, there is no such evidence or agreement. It is likely, I think, that the first respondent has incurred legal costs in defending these proceedings but I cannot ascertain the extent of those costs. Moreover, those costs will be largely attributable to the first respondent’s unsuccessful attempt to avoid liability.
Having regard to all of those matters, I have concluded that a penalty of $1,200 is appropriate for the first respondent’s contraventions of the Act in this case. The facts of this case distinguish it from the cases brought to my attention by the first respondent in that the relevant industrial action here did not arise out of any misplaced sense that there was some safety issue that needed to be investigated or other industrial issue that existed between the employer and its employees.
I will make orders accordingly.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 22 February, 2019.
Date: 22 February, 2019