Director of the Fair Work Building
[2014] FCCA 1459
•7 July 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DIRECTOR OF THE FAIR WORK BUILDING | [2014] FCCA 1459 |
| INDUSTRY INSPECTORATE v LUKA TIPPERS & EXCAVATION PTY LTD & ANOR |
Catchwords: adverse action – termination of employment or injury or alteration of position to prejudice – prohibited reason – exercise of workplace right – engaging in industrial activity – underpayments – admissions of contraventions – agreed penalty – relevant considerations.
Legislation:
Fair Work Act 2009 (Cth), ss.539(2), 557(1)
Cases cited:
Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FRC 216
McIver v Healey [2008] FCA 425
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 838
Kelly v Fitzpatrick (2007) 166 IR 14
Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
DP World Sydney Limited v Maritime Union of Australia (No.2) [2014] FCA 596
NW Frozen Foods Pty Ltd v Australian Competition and Consumer
Commission (1996) 71 FCR 285
Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62
Minister for Industry, Tourism and Resources v Mobile Oil Australia Pty
Ltd [2004] FCAFC 72
| Applicant: | DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
| First Respondent: | LUKA TIPPERS & EXCAVATION PTY LTD (ACN 116 868 565) |
| Second Respondent: | NIKOLA MARIC |
| File Number: | MLG 1510 of 2013 |
| Judgment of: | Judge O’Sullivan |
| Hearing date: | 7 July 2014 |
| Date of Last Submission: | 7 July 2014 |
| Delivered at: | Dandenong |
| Delivered on: | 7 July 2014 |
| REPRESENTATION | |
| Counsel for the Applicant: | Mr Vallance |
| Solicitors for the Applicant: | Fair Work Building & Construction |
| Counsel for the First & Second | Mr Herbert |
| Respondents: | |
| Solicitors for the First & Second | Portelli & Co Lawyers |
| Respondents: |
THE COURT DECLARES THAT:
| (1) | The first respondent contravened section 50 of the Fair Work Act 2009 (Cth) (“the FW Act”) by failing to pay Mr Andrew Lawler: | |||||||||||||||
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| (2) | The first respondent contravened section 44 of the FW Act by failing to: | |||||||||||||||
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| (3) | The first respondent contravened section 340(1)(a)(ii) of the FW Act by taking adverse action against Mr Lawler by: | |||||||||||||||
| ||||||||||||||||
| because he exercised a workplace right by making a compliant or inquiry to a representative of the Construction, Forestry, Mining and Energy Union (“the CFMEU”) which had the capacity under the FW Act to seek compliance with the Agreement. | ||||||||||||||||
| (4) | The first respondent contravened section 346(b) of the FW Act by taking adverse action against Mr Lawler by: | |||||||||||||||
| ||||||||||||||||
| because he engaged in an industrial activity when he sought to be represented by the CFMEU. | ||||||||||||||||
| (5) | The second respondent was involved in each of the contraventions committed by the first respondent set out in declarations 1 to 4 above and is taken to have committed those contraventions pursuant to section 550(1) of the FW Act. |
THE COURT ORDERS THAT:
| (6) | Pursuant to section 546(1) of the FW Act the first respondent pay a total pecuniary penalty of $8,000 for its contraventions of the FW Act referred to in declarations 1 to 4 above. |
| (7) | Pursuant to section 546(1) of the FW Act the second respondent pay a total pecuniary penalty of $2,000 for his contraventions of the FW Act referred to in declaration 5 above. |
| (8) | Pursuant to section 546(3)(a) of the FW Act the first and second respondents pay the pecuniary penalties referred to in orders 6 and 7 above to the Commonwealth within 30 days of the date of this order. |
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE
MLG 1510 of 2013
DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY
INSPECTORATE
Applicant
And
LUKA TIPPERS & EXCAVATION PTY LTD
First Respondent
NIKOLA MARIC
Second Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
1. The Director of the Fair Work Building Industry Inspectorate (“the applicant”) filed an application on 16 September 2013 seeking various declarations, penalties and other orders under the Fair Work Act 2009 (Cth) (the FW Act) in relation events at a building site in South Melbourne in 2012.
2. In the statement of claim filed on 16 September 2014 the applicant made various allegations against Luka Tippers & Excavation Pty Ltd (“the first respondent”) and Mr Nikola Maric (“the second respondent”) by reason of which the above relief was sought.
3. The respondents have now admitted on the basis of the facts set out in the Statement of Agreed Facts filed on 16 May 2014 (S.O.A.F.) that they contravened the FW Act. The S.O.A.F is Attachment A to these reasons.
4. The applicant and the respondents seek orders imposing pecuniary penalties on the respondents for each of the admitted contraventions. The parties agree on penalties that they submit are appropriate and within the permissible range for the admitted contraventions. The parties have also agreed that the penalties ought be paid to the Commonwealth.
5. Accordingly these reasons deal with the background to the agreed contraventions of the FW Act and whether the Court should accept the agreement between the parties as to penalty.
Procedural history
6. These proceedings were commenced by application and statement of claim filed on 16 September 2013.
7. The application was given a first return date of 24 October 2013. Prior to the first return date the parties agreed on consent minutes which were made on 21 October 2013 as follows:
“1. The directions hearing listed on 24 October 2013 be adjourned to 4 March 2014 at 10am.
2. The respondents file and serve a defence by 4.30pm on 22 October 2013.
3. The applicant file and serve any reply by 4.30pm on 5 November 2013.
4. Pursuant to section 34 of the Federal Circuit Court of Australia Act 1999 (Cth), the proceedings be referred for mediation, to a mediator nominated by the District Registrar, the mediation to be conducted after 31 January 2014 and before 28 February 2014.”
8. The first and second respondent subsequently filed a defence. Before the adjourned date the parties agreed on further orders which were made on 15 May 2014 as follows:
“1. The Direction Hearing listed for 19 May 2014 be vacated. 2. The matter be listed for a Penalty Hearing on 7 July 2014 at 2.15p.m.
3. The parties file a Statement of Agreed Facts on or before 16 May 2014.
4. The Applicant file and serve its penalty submissions and any evidence on which it seeks to rely on or before 4.00p.m. on 6 June 2014.
5. The Respondents file and serve their penalty submission and any evidence on which they seek to rely on or before 4.00p.m. on 27 June 2014.
6. The Applicant file and serve its submissions in reply to the Respondents’ submissions, if any, by 4.00p.m. on 4 July 2014.
7. The parties have liberty to apply.”
Penalty Hearing
9. At the penalty hearing today the applicant was represented by Mr Vallance, who told the Court his client relied on the:
• Application filed 16 September 2013; • Statement of Claim filed 16 September 2013; • S.O.A.F filed 16 May 2014; • Submissions filed 6 June 2014; and • Attachment A to the S.O.A.F (minute of proposed orders). 10. At the penalty hearing the respondents were represented by Mr Herbert, who told the Court his client relied on:
• Defence filed 21 November 2013; • S.O.A.F filed 16 May 2014; and • Submissions in reply filed 27 June 2014.
Background
11. The position of the applicant, its ability to commence and continue these proceedings along with position of the respondent were not controversial.
12. A helpful summary of the factual background to the agreed contraventions is set out in the S.O.A.F and with some adaption for the sake of brevity is as follows.
13. In late May 2012 Andrew Lawler began work as an excavation operator for the first respondent. Mr Lawler had accepted the position offered to him by the second respondent to work for the first respondent at Essence Apartments project in Park Street, South Melbourne.
14. Mr Lawler worked for the first respondent at that site from 29 May to 2 June 2012. During this period he worked for 43.5 hours and his employment was governed by the Luka Tippers & Excavation Pty Ltd and CFMEU Civil Construction Industry Enterprise Agreement 2011-2015.
15. Mr Lawler’s employment was not without incident and following a dispute over responsibility for damage done to a capping beam at the site, he complained to the site union delegate. This complaint came to the respondent’s attention.
16. Following this Mr Lawler was told by the second respondent he would not be offered any more work or paid his entitlements.
17. It was not until August 2013 and after the applicant commenced an investigation into the allegations (which are now admitted) of breaches of the FW Act that the first respondent paid Mr Lawler the wages owing to him for the work done in May 2012.
18. As a result of the matters referred to above it is now admitted the first respondent engaged in adverse action in breach of the FW Act against Mr Lawler and did so for the substantial and operative reason that he exercised a workplace right and/or engaged in industrial activity. The second respondent by virtue of his position and involvement in the conduct giving rise to the contraventions is also liable as having contravened the FW Act.
The application
19. The application filed on 16 September 2013 sought the following orders which were set out in Statement of Claim also filed on 16 September 2013:
“47. Orders pursuant to section 546(1) of the FW Act imposing pecuniary penalties on the Respondents and each of them in relation to the various contraventions.
48. An order pursuant to section 546(3)(a) of the FW Act that all pecuniary penalties imposed on the Respondents be paid to the Commonwealth.
49. Such further or other orders as the Court thinks fit.”
20. The defence filed by the respondents denied many of the allegations made by the applicant. However the differences between the parties on the pleadings have been overtaken by the S.O.A.F. filed by the parties and the admissions made regarding the contraventions of the FW Act.
Agreed Contraventions
21. As noted earlier the parties filed the S.O.A.F which relevantly for present purposes provided that the respondents acknowledged:
“a. The respondents now admit that the First Respondent had
contravened:
(i) section 44(1) of the FW Act, by contravening section 125(1) of the FW Act;
(ii) section 340(1)(a)(ii) of the FW Act;
(iii) section 346(b) of the FW Act; and
(iv) section 50 of the FW Act, by contravening:
(A)
clause 23.2.3 of the Luka Tippers & Excavation Pty Ltd and the CFMEU Civil Construction
Industry Enterprise Agreement 2011-2015 (Agreement);
(B) clause 36.2.3 of the Agreement; (C) clause 36.2.5(a) of the Agreement; (D) clause 24(a) of the Agreement; (E) clause 25 of the Agreement; (F) clause 31 of the Agreement; (G) clause 38.1 of the Agreement; and (H) clause 32.1.3 of the Agreement.
b.
The respondents also admit that the Second Respondent was involved in the contraventions committed by the First Respondent within the meaning of section 550(1) of the FW Act.”
Approach to penalty proceedings
22. The authorities establish that the appropriate penalties are to be determined as follows.
23. The first step for the Court is to identify the separate contraventions involved. Each contravention of each separate obligation found in the FW Act is a separate contravention of a civil remedy provision for the purposes of s.539(2) of the FW Act.[1] Section 557(1) of the FW Act provides for treating multiple contraventions of the same provision, involved in a course of conduct, as a single contravention.
[1] Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FRC 216 at 223 (Gibbs);
24. Second, to the extent that two or more contraventions have common elements, this should be taken into account in considering what an appropriate penalty is in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the respondents did.[2] This task is distinct from and in addition to the final application of the “totality principle”.[3]
[2] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 571 [46] (Graham
[3] Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 838 at [41]-[46] (Stone and Buchanan JJ)
25. Third, the Court will consider an appropriate penalty to impose in respect of each contraventions, whether a single contravention, a course of conduct or group of contraventions, having regard to all the circumstances of the case.
26. Finally, having fixed an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the contravening conduct.[4] The Court should apply an “instinctive synthesis” in making this assessment.[5] This is known as the “totality principle”.
[4] See Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Tracey J) (Kelly); Merringtons, supra at [23] (Gray
[5] Merringtons, supra at [27] (Gray J) and [55] and [78] (Graham J)
27. The factors relevant to a penalty for a contravention of the Fair Work Act have been set out in a number of decisions of the Federal Court such that the factors which are to be considered in relation to penalty for the agreed contraventions in this matter are now well established. Those factors have been referred to in the submissions filed by the parties.
28. The following factors identified by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14 have been described as a helpful list of considerations that are relevant to the determination of penalty in matters such as those presently before the Court:[6]
[6] Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064 Logan J at [34]
a) the nature and extent of the conduct which led to the breaches; b) the circumstances in which that relevant conduct took place; c)
the nature and extent of any loss or damage sustained as a result of the breaches;
d) whether there had been similar previous conduct by the respondent; e)
whether the breaches were properly distinct or arose out of the one course of conduct;
f) the size of the business enterprise involved; g) whether or not the breaches were deliberate; h) whether senior management was involved in the breaches; i) whether the party committing the breach had exhibited contrition; j)
whether the party committing the breach had taken corrective action;
k)
whether the party committing the breach had cooperated with the enforcement authorities;
l)
the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m) the need for specific and general deterrence.[7] [7] Kelly at [14] per Tracey J
29. While the above factors are a “convenient checklist”, they do not proscribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion.[8]
[8] Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11] per Gyles J; Merringtons at [91] per
Submissions
30. The applicant filed submissions on 6 June 2014:
“INTRODUCTION
1. In this proceeding, the Applicant seeks the making of declarations and order for the imposition of penalties on the First and Second Respondents for contraventions of sections 44, 50, 340 and 346 of the Fair Work Act 2009 (Cth) (FW Act).
2. The Applicant, First and Second Respondents (Parties) have agreed on certain facts relevant to the claims made by the Applicant. On the basis of those agreed facts, the First and Second Respondents have made admissions about their conduct in contravention of the above provisions of the FW Act
3. The facts agreed by the Parties and the admissions made by the First and Second Respondents are contained in the Statement of Agreed Facts (SOAF) signed by the Parties and filed with the Court on 16 May 2014.
4. On the basis of the admissions made by the First and Second Respondents, the Parties have also reached agreement in relation to the quantum of the penalty ranges which they submit are appropriate for the Court to impose in relation to those admitted contraventions.
5. These are the submissions of the Applicant in relation to the relevant factors to be taken into account by the Court when exercising its discretion to make declarations by consent and impose penalties on the First and Second Respondents on an agreed basis. The submissions also address the factors to be taken into account by the Court, by reference to the facts admitted, in relation to determining whether the penalty ranges proposed by Parties fall within the permissible range of penalties.
BACKGROUND
6. The contraventions concern adverse action taken by the First and Second Respondents against Andrew Lawler (Mr Lawler), an employee of the First Respondent, and the underpayment of wages, overtime, fares and travel allowance, site allowance, superannuation, annual leave and redundancy, for the period 29 May 2012 to 2 June 2012 (Relevant Period). The total underpayment of Lawler’s wages and entitlements in the Relevant Period was $2,443.40 (Underpayment). The Underpayment was rectified on 28 August 2013.
7. At all material times the First Respondent operated an excavation, cartage and disposal business in connection with the erection, construction, repair, renovation, maintenance or demolition of buildings or structures in the State of Victoria (Business), and employed Mr Lawler on a full-time basis as a mechanical excavator operator.
8. The Second Respondent was at all material times the sole director of the First Respondent, the Company Secretary and General Manager of the First Respondent, one of four shareholders of the First Respondent and responsible for the day to day management, direction and control of the First Respondent’s Business.
9. During the Relevant Period Mr Lawler performed work at the request of and for the First Respondent at the Site, operating an 8 tonne and a 14 tonne mechanical excavator (Work), as set out in paragraph 15 of the SOAF.
10. At no time before Mr Lawler commenced employment with the First Respondent, or at any time thereafter, did the First Respondent provide Mr Lawler with a copy of a Fair Work Information Statement in accordance with the FW Act.
11. Mr Lawler was entitled to the payments, benefits and entitlements pursuant to the Luka Tippers & Excavation Pty Ltd and the CFMEU Civil Construction Industry Enterprise Agreement 2011-2015 (Agreement), as set out in paragraphs 17-19 of the SOAF. Mr Lawler did not receive any payment, benefit or entitlement for any of the Work he performed until 28 August 2013, more than a year after his employment had ended.
12. The Second Respondent threatened to terminate Mr Lawler’s employment because Lawler had damaged a capping beam while performing the Work and told Lawler that he was not going to pay Lawler for the Work unless Lawler agreed to have the cost of repairing the capping beam deducted from his pay, which Lawler agreed to.
13. Mr Lawler subsequently complained to Gerald McCrudden, a Shop Steward and Delegate for and on behalf of the Construction, Forestry, Mining and Energy Union (CFMEU) and sought representation from the CFMEU, through McCrudden, in relation to recovering his full pay. In doing so, Lawler had exercised his workplace right to make a complaint or inquiry to a person or body who had capacity to seek compliance with a workplace instrument (s 341(1)(c)(i)) and engaged in an industrial activity by seeking to be represented by the CFMEU (s 347(b)(vii).
14. The Second Respondent subsequently informed Mr Lawler that he was aware that Mr Lawler has spoken to Mr McCrudden and would not be paid his entitlements. Mr Lawler was not offered any further work by the First Respondent and was not paid any of his entitlements until 28 August 2013.
15. As a consequence of the statements made and the conduct engaged in by the First and Second Respondents in relation to not paying Mr Lawler his lawful entitlements, failing to provide him with an information statement and threatening to, and subsequently, terminating his employment because he exercised his workplace rights and engaged in an industrial activity, the First and Second Respondents have admitted to engaging in unlawful conduct and contravening the FW Act.
ADMITTED CONTRAVENTIONS
16. At subparagraph 5(a) of the SOAF, the First Respondent admits to contravening:
(a) section 44(1) of the FW Act, by contravening section 125(1) of the FW Act; (b) section 340(1)(a)(ii) of the FW Act, in respect of taking adverse action against Mr Lawler because he had exercised a workplace right; (c) section 346(b) of the FW Act, in respect of taking adverse action against Mr Lawler because he had engaged in an industrial activity (d) section 50 of the FW Act, for contravening a term of the Agreement in respect of failing to pay Mr Lawler: (i) for his ordinary hours of work performed, pursuant to clause 23.2.3 of the Agreement;
(ii) for overtime hours of work performed, pursuant to clause 36.2.3 of the Agreement;
(iii) for overtime hours of work performed on a Saturday, pursuant to clause 36.2.5(a) of the Agreement;
(iv) fares and travelling allowance, pursuant to clause 24(a) of the Agreement;
(v) site allowance, pursuant to clause 25 of the Agreement;
(vi) superannuation contributions to CBus, pursuant to clause 31 of the Agreement;
(vii) his accrued annual leave plus annual leave loading, pursuant to clause 38.1 and Appendix B of the Agreement; and
(viii) redundancy, pursuant to clause 32.1.3 of the Agreement.
(ix)
together referred to as the Admitted Contraventions.
17. At paragraph 45 of the SOAF, the Second Respondent admits to his involvement in the Admitted Contraventions pursuant to section 550(1) of the FW Act.
18. The Parties consent and agree to the Court making declarations and orders in the terms set out in Attachment A to the SOAF.
EVIDENCE RELEVANT TO THE IMPOSITION OF PENALTY
19. The Applicant relies upon the SOAF. Accordingly, the detailed facts relevant to this matter are set out in the SOAF and are not repeated in these submissions.
LEGISLATIVE FRAMEWORK
20. These proceedings are brought by the Applicant pursuant to the FW Act in relation to contraventions of section 44 (contravening the National Employment Standards (NES)) section 50 (contravening an Enterprise Agreement) and Part 3-1 of the FW Act.
21. Subsection 546(1) of the FW Act enables this Court to order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
22. Subsection 22(1)(a) of the Acts Interpretation Act 1901 (Cth) provides that, unless the contrary intention appears, expressions used to denote persons generally include a body politic or corporate as well as an individual.
23. Subsection 539(1) of the FW Act defines a civil remedy provision as a provision referred to column 1 of the table in subsection 539(2). Column 1 of the table refers to subsections 45, 340(1), 343(1) and 344 as civil remedy provisions.
24. Section 16 of the Federal Circuit Court of Australia Act 1999 (Cth) gives the Court a wide discretionary power to make declarations of right.[9]
[9] Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437–438; Ainsworth v Criminal Justice Commission
PRINCIPLES APPLICABLE TO THE ASSESSMENT OF
PENALTY25. The applicable principles are well known and set out in the following authorities:
a)
Ponzio v B&P Caelli Constructions Pty Ltd (2007) 158 FCR 543 (Marshall, Lander and Jessup JJ) at [93]-[94], [98], [110], (Lander J); and [145]-[146] (Jessup J).
b)
Australian Ophthalmic Supplies Pty Ltd v McAlary- Smith (2008) 165 FCR 560 (Merringtons) (Gray, Graham and Buchanan JJ) at [23] and [27] (Gray J), [53]-[60], [66]-[71] (Graham J) and [89]-[91] and [94]-[97] (Buchanan J).
c)
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 (Mornington Inn) (Gyles, Stone and Buchanan JJ) at [5]-[9] (Gyles J), [60]-[63] (Stone and Buchanan JJ).
d)
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (Burchett, Carr and Kiefel JJ) at 291-292, (Burchett and Kiefel JJ).
e)
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 (Branson, Sackville and Gyles JJ) at [50]-[60] (Full Court).
26. The Applicant suggests the following approach for the Court in determining the appropriate penalties to impose.
27. The first step for the Court is to identify the separate contraventions involved. Each contravention of each separate obligation found in the FW Act in relation to each employee by the First Respondent is a separate contravention for the purposes of subsection 546(1) of the FW Act.[10]
[10] Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; McIver v Healey
28. Secondly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The First and Second Respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the First and Second Respondents did.[11] This task is distinct from and in addition to the final application of the ‘totality principle’.[12]
[11] Merringtons at [46] per Graham J.
[12] Mornington Inn at [41]-[46] per Stone and Buchanan JJ.
29. Thirdly, the Court will then consider an appropriate penalty to impose in respect of each contravention or each group of contraventions, having regard to all of the circumstances of the case.
30. In cases where the parties have reached agreement in relation to the penalties or penalty ranges to be imposed, the Court must be satisfied the penalties fall within the permissible range.[13]
[13] Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] and
31. The overall approach of the Court to imposing a penalty for any particular contravention has been described as applying an ‘instinctive synthesis’ to assessing the pertinent factors and competing considerations in arriving at a penalty.[14] “Instinctive synthesis” refers to the “method of sentencing by which the judge identifies the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case”.[15] The process is to be distinguished from the totality principle. It is apt to apply to the entire process of sentencing.
[14] Merringtons at [27] per Gray J and [55] and [78] per Graham J; Australian Licensed Aircraft Engineers
[15] Markarian v R (2005) 228 CLR 357 at [51] per McHugh J.
32. In a case such as the present, the Court should acquaint itself with the facts of, and surrounding, the admitted contraventions and derive from those facts an understanding of the extent and nature of the conduct of the respondents, and of the gravity of that conduct generally.[16]
[16] Wotherspoon v Construction Forestry Mining & Energy Union [2010] FCA 111 at [8] per Jessup J.
33. Fourth, having fixed an appropriate penalty for each contravention or group of contraventions, the Court will apply the totality principle. This principle applies where a penalty is to be imposed for a number of offences and operates as a check on the aggregate of the penalties. Application of the principle involves a calculation of penalties to be imposed for each offence having regard to the principles involved in imposing consecutive sentences and then reviewing the aggregate sentence and considering whether that aggregate is “just and appropriate”.[17]
[17] Mill v R (1998) 166 CLR 59 applied in Australian Competition and Consumer Commission v Australian
34. Annexures A and B summaries the Applicant’s proposed approach to penalty in this matter, taking into account the application of each of the above principles.
PECUNIARY PENALTIES
35. Column 4 of the table, located in subsection 539(2) of the FW Act, provides that the maximum penalty that can be imposed by a court for each contravention of subsections 44, 50, 340(1) and 346 of the FW Act is 60 penalty units.
36. Subsection 546(2) of the FW Act provides a pecuniary penalty must not be more than:
a) if the person is an individual, the maximum number of penalty units referred to column 4 of the table in subsection 539(2) of the FW Act (60 penalty units); and b) if the person is a body corporate, five times the maximum number of penalty units referred to in column 4 of the table in subsection 539(2) of the FW Act (300 penalty units). 37. Section 12 of the FW Act provides that the term “penalty unit” has the meaning given by section 4AA of the Crimes Act 1914 (Cth) (Crimes Act). The contravening conduct occurred prior to the increase in the definition of a “penalty unit” which was effective from 28 December 2012. During the Relevant Period, section 4AA of the Crimes Act 1914 (Cth) defined a “penalty unit” to be $110.
38. Therefore, the maximum penalty that may be imposed by the Court for each contravention of the FW Act is:
(a) $33,000 in relation to the First Respondent (300 x $110); and (b) $6,600 in relation to the Second Respondent (60 x $110). 39. The First and Second Respondents have admitted that they have both each separately committed 11 contraventions of the FW Act, which would result in a maximum penalty for:
(a) the First Respondent: $363,000 (b) the Second Respondent: $72,600 40. The Applicant accepts that the admitted contraventions of the First and Second Respondents have common elements and certain contraventions arise from the same unlawful conduct. The Applicant submits this should be taken into account by the Court when considering an appropriate penalty to ensure the First and Second Respondents are not punished more than once for the same or substantially similar conduct, as set out below.
COURSE OF CONDUCT
41. Subsection 557(1) of the FW Act provides that two or more contraventions of civil remedy provisions, as defined in subsection 557(2), are taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person. 42. Subsections 557(2)(b) and (c) provides that sections 44 and 50 of the FW Act are civil remedy provisions to which subsection 557(1) applies.
43. The Applicant submits that the contraventions of the FW Act admitted by the First and Second Respondents at paragraph 5(a) of the SOAF give rise to separate contraventions.
44. In this regard, the Applicant submits the Explanatory Memorandum to the Fair Work Bill supports this construction.
“… if a company contravenes five separate terms of a modern award in respect of ten employees, these 50 contraventions are taken to be five contraventions. This means that the maximum penalty that the Court can impose is five times a maximum penalty of 300 penalty units”.18
45. Accordingly, the Applicant submits there are nine separate contraventions of sections 44 and 50 of the FW Act comprised of:
(i) one contravention section 125(1) of the FW Act;
(ii) one contravention of clause 23.2.3 of the Agreement;
(iii) one contravention of clause 36.2.3 of the Agreement;
(iv) one contravention of clause 36.2.5(a) of the Agreement;
(v) one contravention of clause 24(a) of the Agreement;
(vi) one contravention of clause 25 of the Agreement; (vii) one contravention of clause 31 of the Agreement;
(viii) one contravention of clause 38.1 and Appendix B of the Agreement; and
(ix) one contravention of clause 32.1.3 of the Agreement.
46. Section 557 of the FW Act does not apply to contraventions under Part 3-1 of the FW Act. The Applicants submits there has been:
a) one contravention of subsection 340(1)(a)(ii) of the FW Act; and b) one contravention of subsection 346(b) of the FW Act. 47. In QR Limited v Communications Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia,[19] Chief Justice Keane and Justice Marshall held:
[19] [2010] FCAFC 150.
Even if s 557(2) does not apply to a case to oblige to treat as one contravention all the consequences of a particular piece of conduct, it is open to the Court, in an appropriate case, to take into account, as a matter of discretion, the circumstance that the same acts or omissions have resulted in multiple contraventions by multiple breaches of a term cast in similar language in each of multiple agreements, by imposing a lesser penalty or even no penalty in respect of contraventions of some terms, while imposing a substantial penalty in respect of contraventions of other terms.20
48. In Mastwyk v Crisp [2011] FCA 349, North J at [22] observed that the course of conduct concept “is perhaps best explained as a relevant factor by which to analyse certain factual circumstances, in order to determine the justice or appropriateness of the penalty.”
49. Where there is a continuum of acts intended to produce a particular result, they should be treated as one act of contravening conduct for the purpose of imposing a penalty. This is so even though more than one contravention may be involved (Construction, Forestry, Mining and Energy Union v Williams (2009) 191 IR 445 at [23] - [25] and [31]). In such cases, it may be appropriate for the penalties imposed to be concurrent rather than consecutive (Cozadinos v Construction, Forestry, Mining and Energy Union [2010] FCA 48 at [40] per Marshall J). The question is whether two technical contraventions can properly be seen as a single course of conduct: if they can fairly be regarded as forming part of the same transgression, they should treated as one contravention (Williams at [26] and Wotherspoon v Construction Forestry Mining and Energy Union [2010] FCA 111 at [31] per Jessup J).
50. In Williams the Court relied upon an explanation given by Owen JA in Royer v The State of Western Australia [2009] WASCA 139 (Royer) at [30], as follows:
"Against that general background how is the one transaction principle to be understood and applied? Save for the instances in which the interrelationship between multiple offences is so close that injustice can only be avoided by concurrency of terms, the answer will usually emerge from considerations of proportionality to or with the criminality of the offender's conduct viewed in its entirety. Looked at in this way, the one transaction principle and the totality principle are closely connected. A sentencing judge is obliged to impose an effective term that she or he judges to be appropriate for the overall criminality of the offender's conduct. Even where, on a strict and literal understanding of the one transaction principle, it might be said that the concurrency of terms can be justified, the need for proportionality might demand cumulative or partly cumulative terms."
51. In Stuart v Construction, Forestry, Mining and Energy Union [2010] FCAFC 65 (Stuart), the Court, in dealing with contraventions of sections 38 and 44(1) of the Building Construction Industry Improvement Act 2005 (Cth) and an argument that that the section 38 contravention was subsumed within the subsection 41(1) contravention applied the following passage from the High Court in Pearce v R[21] (Pearce):
[21] (1998) 194 CLR 610
‘To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.’[22]
[22] (1998) 194 CLR 610 at [40] (per McHugh, Hayne and Callinan JJ). This passage was re-affirmed in Johnson v R (2004) 205 ALR 346 at [27] – [34].
52. Notwithstanding that there are separately identifiable contraventions of FW Act by the First and Second Respondents, the Applicant accepts that there is some degree of overlap in relation to the 11 contraventions for which the First and Second Respondents have made admissions. This is acknowledged in the groupings of the categories of contraventions set out below.
53. Principles relevant to the determination of penalties in the context of contraventions of the former Workplace Relations Act 1996 (Cth) (WR Act) involving broadly similar provisions[23] were considered by the Full Court in Mornington Inn. In relation to principles concerning “course of conduct”, Stone and Buchanan JJ[24] referred to the following observations of Wells J in Attorney-General (SA) v Tichy[25] which were cited with approval by Gleeson CJ in Johnson v The Queen:[26]
[23] Subsections 400(5) [duress in connection with an AWA] and 792(1) [injuring or altering the position of an employee for a prohibited reason] of the WR Act.
[24] Mornington Inn at [41].
[25] (1982) 30 SASR 84 at 92-93.
[26] (2004) 205 ALR 346 at [4]-[5].
Where there are truly two or more incursions into criminal conduct, consecutive sentences will generally be appropriate. Where, whatever the number of technically identifiable offences committed, the prisoner was truly engaged upon one multi-faceted course of criminal conduct, the judge is likely to find concurrent sentences just and convenient.
54. More recently, two members of a Full Court described the “course of conduct” principle and its potential application as follows:[27]
[27] CFMEU v Cahill (2010) 269 ALR 1 at [39] (Middleton and Gordon JJ).
The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry.
CATEGORIES OF CONTRAVENTION
55. Accordingly, the Applicant submits that the contraventions admitted by the First and Second Respondents should be categorised into 3 distinct groups as follows:
(a) Agreement entitlements and the NES contraventions: comprising the nine separate contraventions of sections 44 and 50 of the FW Act; and (b) Adverse Action contraventions: comprising the contraventions of sections 340(1)(a)(ii) and 346(b) of the FW Act. 56. The Agreement entitlements and the NES contraventions have a common thread. The First and Second Respondents did not comply with either the minimum obligations imposed either under the provisions of the Agreement or the NES. The Applicant accepts that, given the confined period of time in which the contravening conduct occurred, the NES contravention (section 44(1)) overlapped with the Agreement entitlements contraventions.
57. The Adverse Action contraventions arose out of the same course of conduct and are in substance very similar. The adverse action taken by the First and Second Respondents in relation to both contraventions was taken for the same reason, namely because Mr Lawler had sought representation from the CFMEU in relation to his workplace rights.
58. The Applicant submits that the Court should approach the assessment of the relevant maximum penalties that could be imposed by the Court, having regard to the two identified categories of contravention above, to be:
a. $66,000 in respect of the First Respondent; and b. $13,200 in respect of the Second Respondent. 59. Whilst the imposition of penalties is ultimately a matter for the Court’s discretion, the Parties submit that such categorisation avoids the potential for any double punishment to be visited upon the First and Second Respondents consistent with the authorities referred to and having regard to the issues raised above.
FACTORS RELEVANT TO DETERMINING PENALTY
60. The factors relevant to the imposition of a penalty under commonwealth workplace relations legislation have been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 (Pangaea), [26]-[59], as follows:
(a)
the nature and extent of the conduct which led to the breaches;
(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 breaches;
(d)
whether there had been similar previous conduct by the defendant;
(e)
whether the breaches were properly distinct or arose out of the one course of conduct;
(f) the size of the business enterprise involved; (g) whether or not the breaches were deliberate; (h)
whether senior management was involved in the breaches;
(i)
whether the party committing the breach had exhibited contrition;
(j)
whether the party committing the breach had taken corrective action;
(k)
whether the party committing the breach had co- operated with the enforcement authorities;
(l)
the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m) the need for specific and general deterrence. 61. This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080, [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11]; Merringtons at [91] per Buchanan J.
62. The court is required to exercise its discretion on a consideration of the circumstances of the particular case and in the context of the statutory purpose of the legislation under which the penalty is sought. Checklists of factors are useful, as are so-called “precedent” or “comparable” cases. However, the Court should not be distracted from paying “appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain the public confidence in the statutory regime which imposes the obligations” (see NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295 applied in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 ALR 35 per Gray J at [12]-[13] and Buchanan J at [87]; see also Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd [2010] FCA 652 at [34] per Logan J).
63. The Applicant submits that each factor is relevant to the circumstances of this proceeding and should be considered by the Court and is addressed in turn below.
Nature and extent of the conduct and the circumstances in which the conduct took place
64. Employees should not be subject to adverse action because they exercise their workplace rights in the workplace. The conduct in question relates to a breach of the Respondents’ obligations under the general protection provisions of the FW Act, which were introduced on 1 July 2009.
65. Pursuant to subsections 336(a) and (d) of the FW Act, the purpose of the general protection provisions in the FW Act is to protect workplace rights and to provide effective relief for persons who have been discriminated against, victimised or otherwise adversely affected as a result of a contravention of the general protection provisions.
66. The Applicant submits that although the period of contravening conduct was short, the nature of the adverse action contraventions was serious and resulted in the termination of Mr Lawler’s employment.
67. The Applicant also notes that while the underpayment was relatively minor, it was not a technical oversight on behalf of the Respondents, as set out in paragraph 31 of the SOAF.
Nature and extent of the loss
68. Mr Lawler was underpaid a total of $2,433.40. The Applicant notes that while the First Respondent has rectified the underpayment in full as set out in paragraph 24 of the SOAF, Mr Lawler was only paid his wages and entitlements shortly before proceedings were commenced on 16 September 2013 and more than a year after his employment was terminated.
69. As stated above, the Applicant notes that while the underpayment was relatively minor, it was not a technical oversight on behalf of the Respondents.
70. Further, the conduct directed and taken against Mr Lawler was serious because it resulted in the loss of his employment because he exercised his workplace rights.
Similar previous conduct
71. The First and Second Respondents are before the court for the first time. They have no prior history or contraventions recorded against them in the sphere of industrial law.
72. Recently, McKerracher J in Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579
(referring to an earlier decision[28]) recognised that being a “first offender” is a relevant consideration when fixing a penalty.[29] The Respondents should be treated as having first offender status.
[28] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2)
[29] Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [43] per McKerracher J.
Whether the breaches arose out of the one course of conduct
73. As set out above, the Applicant submits that the Respondents have benefited from application of the statutory course of conduct provisions and the grouping of the 11 contraventions into two groups set out in Annexures A and B, which appropriately reflect the character of the contraventions. On this basis, the Applicant submits that there is no basis for further amalgamation of the contraventions.
Size and financial circumstances of the business
74. The Applicant accepts that the Respondents operate a small business.
75. However, regardless of the size or the financial position of the business, these factors do not absolve the First and Second Respondents of their legal responsibility to comply with the law in relation to the employment of its Employees. As Tracey J noted in Kelly:
“No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction must be imposed at a meaningful level.”[30]
[30] Kelly at [28] per Tracey J.
76. It is clear that the size of the business provides no excuse for non-compliance.
Deliberateness of the breaches
77. Whilst the Applicant accepts the First and Second Respondents did not set out to deliberately contravene the FW Act, the First and Second Respondents pursued a deliberate course against Mr Lawler because he had exercised a workplace right.
78. It is submitted, however, that the First and Second Respondents’ unlawful conduct falls into the category of careless disregard for the Employer’s statutory obligations. The contraventions demonstrate incompetence rather than deliberateness.
Involvement of Senior Management
79. The Second Respondent has admitted he was involved in the contraventions of the Admitted Contraventions, as set out in paragraph 45 of the SOAF. The Second Respondent has admitted that he was at all relevant times the directing mind and will of the First Respondent and responsible for the day to day management, direction and control of the First Respondent’s business, as set out in paragraph 9 of the SOAF.
80. The facts demonstrate the close involvement and knowledge of the Second Respondent in the conduct that gave rise to the contraventions of the FW Act.
Contrition, corrective action, co-operation with authorities
81. The Applicant submits that while the Respondents were not co-operative during the investigation, the Respondents have facilitated the efficient conduct of this matter by way of admitting liability and entering into an agreed statement of facts.
82. The First and Second Respondents admitted the contraventions at the mediation stage of this proceeding and had previously paid the outstanding entitlements owed to Mr Lawler.
83. This reveals a level of contrition and demonstrates a readiness on the part of the First and Second Respondents to accept responsibility for their unlawful conduct.
84. The Federal Court has previously acknowledged that the maximum discount for a plea of guilty made at the first reasonable opportunity in a criminal case is said to be 25%.[31] There is no hard and fast rule and the discount can vary from jurisdiction to jurisdiction and from case to case within each jurisdiction. In Mornington Inn Stone and Buchanan JJ made the following observations in relation to the circumstances in which the penalty to be imposed should be discounted by reason of an admission of liability:
[31] Blandy v Coverdale NT Pty Ltd (2008) 178 IR 150 at [73] per Reeves J citing Mornington Inn at [75].
It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing – that would discriminate against a person who exercised a right to contest the allegations. A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice. Remorse and an acceptance of responsibility also merit consideration where they are shown.
A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity although, as was indicated in Cameron (at [23] – [24]) there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates.
“As Branson J has pointed out (see Alfred v Walter Construction Group Limited [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.[32]
[32] Mornington Inn at [74]-[76] per Stone and Buchanan JJ.
85. The Applicant notes that where wrongdoers have co- operated with the relevant authorities and have made admissions early in the course of an investigation or soon after the commencement of proceedings that it is appropriate to allow a discount of penalty.
86. The co-operative approach adopted by the First and Second Respondents in executing a SOAF, containing full admissions, and agreeing to a penalty range has saved considerable cost to the public purse by avoiding the need for a fully contested hearing and minimised the impact on the Court’s resources.
87. The Parties submit the First and Second Respondents are entitled to a discount for its admissions and co-operation. The discount has been factored into the agreed penalty by the Parties.
Ensuring compliance with minimum standards
88. The importance of employees exercising their rights to freedom of association is central to the objects of Part 3-1 of the FW Act. Recently, McKerracher J in Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 said:
“In imposing a penalty against the respondents, it is necessary for the court to set the penalty in a range that reinforces the fundamental importance of compliance with the employment standards enshrined in Commonwealth workplace laws.”[33]
[33] Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [36] per McKerracher J.
89. Relevantly, subsection 3(e) of the FW Act provides that one of its primary objectives is:
enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; (emphasis added)
90. The objects of Part 3-1 of the FW Act include[34]:
[34] Section 336 of FW Act.
a) to protect workplace rights; ...
d)
to provide effective relief for persons who have been discriminated against, victimised or otherwise
adversely affected as a result of contraventions of
this Part. (emphasis added)
91. The courts have placed considerable weight on the importance of the need to protect industrial freedom of association when imposing penalties. Relevantly, Barker J recently said:
The law of Australia has for a long time emphasised the importance of industrial freedom of association. The FW Act marks out industrial freedom of association as one of its important objectives. I take into account in this case the need for a pecuniary penalty to reflect the importance of the maintenance of that objective of the FW Act.[35]
[35] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2)
92. The FW Act has extended the notion of “freedom of association” to embrace workplace rights and industrial activity. The conduct in respect of Mr Lawler relates to the protection of his workplace rights and against unfair treatment.
93. The provisions concerning compliance, at Part 4-1 of the FW Act, is one of the ways that the FW Act seeks to give effect to these principal objects.
94. The courts have treated the contravention of awards and workplace agreements seriously and have awarded considerable penalties against employers for those contraventions.[36]
[36] QR Limited v Communications Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
95. The Applicant submits that when imposing a penalty it is imperative for the Court to set the penalty range that reinforces the fundamental importance of compliance with the general protection provisions that came into effect from 1 July 2009. As set out above, the principal object of the FW Act is the protection of workplace rights. There is a need to send a strong message to employers that they cannot take adverse action against Employees because of reasons that include that they are exercising legitimate workplace right, such as making a complaint or enquiry to an industrial association, or engaging in industrial activity by seeking to be represented by an industrial association.
96. The substantial penalties set by the legislature for breaches of the general protections provisions reinforce the importance placed on compliance with minimum standards. Employers should be in no doubt that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law. Recently, in Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2)[37] Marshall J observed:
[37] [2012] FCA 557.
“It is important to ensure that the protections provided by the Act to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected.” [38]
[38] Ibid at [29].
General and Specific Deterrence
97. It is well-established that “the need for specific and general deterrence” is a factor that is relevant to the imposition of a penalty under the FW Act. See for example, Mowbray FM in Pangaea, [26]-[59].
General deterrence
98. The role of general deterrence in determining the appropriate penalty is illustrated by the comments of Lander J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, [93]:
‘In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.’
99. In Trade Practices Commission v CSR Limited[39] (CSR), French J (as he then was) noted:
[39] [1990] FCA 521.
The principal, and I think probably the only, object of the penalties imposed … is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.[40]
[40] Ibid at [40].
100. Similarly in CPSU v Telstra Corporation Limited [41] Justice Finkelstein noted that:
[41] (2001) 108 IR 228 at 231 at [9].
…even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and act as a warning to others not to engage in similar conduct.
101. The Court should have regard to the message sent; in relation to the imposition of penalties, to employers and the community generally that non-compliance with industrial instruments, the taking or threatening to take adverse action and applying pressure will not be tolerated in the workplace. Justice Barker held:
At a general level, persons in the position of an employer must receive a message, indicated by the imposition of a pecuniary penalty, that much more than lip service is to be paid to the objectives of the FW Act in relation to industrial freedoms.[42]
[42] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394 at [20] per Barker J.
102. The Court should have regard to the message sent, in the imposition of penalties, to employers and the community generally that non-compliance with industrial instruments and taking or threatening to take adverse action will not be tolerated.
103. The fundamental importance of general deterrence is to impress upon employers the importance of ascertaining and complying with their obligations to employees, and to deter employers who may be tempted to commit similar contraventions.
Specific deterrence
104. In relation to specific deterrence, Gray J in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union[43] observed:
[43] (2008) 170 FCR 357 at [37].
Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.
105. Whilst the need for specific deterrence is not particularly high in this case, given the First and Second Respondents have admitted the contraventions and rectified the underpayments owed to Mr Lawler, the First and Second Respondents should be left in no doubt that failing to comply with the obligations under the FW Act will not be tolerated by the Courts.
AGREED PENALTIES
106. The Parties agree that the circumstances in which the contraventions occurred and the nature of the conduct require a meaningful penalty to be imposed having regard to the objects of the FW Act and the need for general deterrence in particular.[44]
[44] Merringtons at [53] per Graham J. 45 Merringtons at [91] per Buchanan J. 46 Wells v Locarno Management Pty Ltd [2008] FCA 1034 at [23] per Jessup J.
107. The Parties are in agreement in relation to the amounts of the penalties that should be imposed on the First and Second Respondents by reason of their admitted contraventions of the FW Act.
108. The Applicant submits, having regard to the 2 identified categories contraventions outlined earlier in these submissions, that the Court should impose penalties within the following monetary range:
(a) $8,000 in respect of the First Respondent; and (b) $2,000 in respect of the Second Respondent. See Annexures A and B respectively.
109. The agreed penalties for the First and Second Respondents represent are at the lower end of the spectrum of the maximum penalties that could be imposed for the two categories of contraventions referred to above. These agreed penalties take into account and acknowledge that fact that:
(a)
the contravening conduct took place over a very short period of time;
(b)
the First and Second Respondents have admitted their contraventions;
(c) the size of the underpayment; and (d) the underpayments have been rectified 110. Notwithstanding the agreement of the Parties, the determination of the correct penalty to be imposed on the First and Second Respondents is ultimately a matter for the Court. The task of the Court is to “fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations”.45
THE COURT’S APPROACH TO AN AGREED PENALTY
RANGE111. Recently in Cozadinos v Construction, Forestry, Mining and Energy Union [2013] FCA 1243 at [18], Tracey J set out the approach of the Court with respect to agreed penalties outcomes by parties:
The approach of the Court to proposals of this kind is now well established. It was propounded by the Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 and was summarised by Kenny J in White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5] as follows:
(a)
it is the responsibility of the Court to determine the appropriate penalty;
(b)
determining the amount of penalty is not an exact science;
(c)
within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another;
(d)
there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;
(e)
the view of the regulator, as a specialist body, is a relevant, but not determinative, consideration;
(f)
in determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case; and
(g)
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, in the Court’s view, is appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range.”
112. While fixing a penalty is ultimately a matter for the Court, where parties agree on penalty, the Court should not disturb it unless it falls outside the permissible range. Justice Jessup observed:
“The court is not bound by the agreement of the parties as to the level of penalty which should be imposed in a case such as the present. However, the court will not depart from an agreed figure merely because it might otherwise have been disposed to award some other figure. The predictability involved in the resolution of penal proceedings in accordance with a pre-trial agreement reached by the parties is something which should, as a matter of public policy, be regarded as beneficial. Only where the agreed penalty falls outside the permissible range should the court depart from the figure agreed by the parties. In this context, the permissible range is the range which would be permitted by the court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive”.46
113. The Court can be satisfied the agreed penalty range falls within the permissible range of appropriate penalties and is neither manifestly inadequate nor manifestly excessive. The contraventions involve breaches of important statutory protections relating to acceptable workplace conduct and the Parties recognise an appropriate penalty must be imposed.
114. The Applicant believes that given the First and Second Respondents have agreed to orders imposing the penalties (see paragraphs 46 to 48 of the SOAF) that no issue will arise in relation to the First and Second Respondents’ capacity to pay such a penalty.
115. Recent comparable cases involving adverse action have considered penalties of between $10,000 and $30,000 to be appropriate (see for example Grant v State of Victoria (The Office of Public Prosecutions) (No.2) [2014] FCCA 991 and Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064).
116. The Parties do note however, the Courts have warned against comparing the case the subject of the assessment with any other particular case as to derive from it the amount of penalty to be fixed.[47]
[47] NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295;
117. The Parties submit, taking all the above matters into account and the fact the contraventions, although separate and distinct, were related in time, context and purpose, that the proposed penalty range falls within the permissible range and is just and appropriate for the Court’s consideration in this case.
Barbaro v The Queen
118. In the recent decision of Barbaro v The Queen [2014] HCA 2 (Barbaro), the High Court held that criminal prosecutors should not make submissions to a sentencing judge on the outer bounds of the available sentencing range. A question has arisen as to whether Barbaro applies in the civil penalty context. The Applicant submits that it does not.
119. The Applicant submits that it is permissible for it to submit to the Court its view on what penalty should be imposed on the Respondents. The Applicant respectfully refers to the
recent Federal Court decision of Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, in which Middleton J considered whether Barbaro implicitly overruled NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 291 per Burchett and Kiefel JJ and Minister for Industry, Tourism and Resources v Mobile Oil Australia Pty Ltd [2004] FCAFC 72 at [36]- [79] per Branson, Sackville and Gyles JJ which are long standing authority for the practice of regulators in civil penalty proceedings making a submission about the appropriate range of penalties. Middleton J considered that the High Court in Barbaro did not intend to exclude, in the civil context, the making of submissions (joint or otherwise) by the parties as to appropriate orders to make (not just as to penalty but also as to injunctions and disqualification orders). Middleton J reasoned:
140.
A regulator bringing a civil penalty proceeding stands in a different position than that of a prosecutor in a criminal proceeding. By its very establishment and functions, such a regulator does not have, and is not expected to have, the independent role and characteristics of the prosecutor. Unlike the prosecutor, the regulator will generally have conducted the investigation which led to the proceedings, dealt with the respondent in relation to those investigations, and instructed its own lawyers and counsel to represent it in the proceedings. The regulator typically has responsibility for all aspects of the regulatory sphere including administering its statutory regime, investigating breaches, enforcing breaches through non-judicial processes (such as enforceable undertakings) and through judicial processes such as obtaining penalties, injunctions, and remediation orders.
141.
The separate and distinct role of a prosecutor is clearly illustrated when a regulatory agency refers a brief for criminal prosecution to the Director of Public Prosecutions. It is then that the special independence, role and functions of the prosecutor become engaged.
142.
It is the very nature of a civil regulatory proceeding that the regulator contends for a particular outcome (often not confined to civil penalties but including injunctions, disqualification orders, and compensation orders). The very purpose of the proceedings brought by the regulator is to secure a particular regulatory outcome. Accordingly, the very process undertaken by a civil regulator makes it a party with a different interest and different functions from a criminal prosecutor.
143.
In fact, the specialist role of a regulator is one of the reasons why the Full Court has supported the practice of submissions being made as to the appropriate penalty amount: see NW Frozen Foods at 298F and Mobile Oil at [51].
144.
As I have already alluded to, there may also be different purposes in imposing a criminal sentence and civil penalty in the context of a particular legislative scheme, particularly in relation to deterrence.
145.
A principal object of imposing a pecuniary penalty is deterrence. Broader considerations apply in imposing a criminal custodial sentence.
146.
This primary purpose for imposing civil penalties is one of the key reasons why the Full Court of the Federal Court has adopted the approach of encouraging submissions as to agreed penalty amounts.
147.
Of course, deterrence is not the only purpose to be served by the imposition of a civil penalty, but it is a primary purpose.
148.
As the High Court recently observed in ACCC v TPG Internet Pty Ltd [2013] HCA 54; (2013) 88 ALJR 176 per French CJ, Crennan, Bell and Keane JJ at [65]:
General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct.
149. The acceptance of agreed penalty amounts (providing always that the Court undertakes its duty to fix the appropriate penalty) increases the certainty of outcome for regulators and wrongdoers. This increases the predictability of outcomes for regulators and respondents and makes it more likely that proceedings will be resolved by agreement in an appropriate way and under the supervision of the Court. This in turn improves deterrence by encouraging the implementation of corrective measures and freeing up the resources of the regulator.
150. In light of the above observations, I do not consider that the High Court intended to exclude, in a civil context, the making of submissions (joint or otherwise) by the parties as to appropriate orders to make (not just as to penalty, but also as to injunctions and disqualification orders). Without specific mention and consideration, I do not conclude that the High Court implicitly overruled the earlier Full Court decisions of NW Frozen Foods and Mobil Oil.
151. The ACCC brought to my attention two recent decisions which have applied Barbaro. In Flight Centre at [56], Logan J (without the benefit of argument) purported to apply Barbaro, and did not take into account the ranges of penalty referred by the parties in civil penalty proceedings. His Honour, with respect, seemed to assume the correctness of the application (by analogy) of Barbaro to the civil penalty proceeding before him. In these circumstances, I do not consider I need follow the approach taken by Logan J, having reached a different view after receiving submissions on the matter (albeit without a contradictor) and coming to my own conclusion: see the principles enunciated in CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1 at [13].
152. The other recent decision was that of Grocon v Construction, Forestry, Mining and Energy Union (No 2) [2014] VSC 134 (‘Grocon’). On 31 March 2014, Cavanough J held that he was bound to follow Barbaro in the course of imposing penalties for contempt. The proceedings before his Honour involved mainly a series of criminal contempts. The parties had made submissions as to the appropriate penalties to be imposed for a number of findings of contempt. The parties were subsequently invited to make submissions about the effect of Barbaro. The parties agreed with the trial judge’s provisional conclusion that Barbaro required him to completely disregard all submissions that suggested particular figures or ranges. Accordingly, Cavanough J did not need to consider the matter further. As that decision reveals, the imposition of penalties for contempt (in the main criminal contempt), was treated as closely comparable with (if not equivalent to) criminal sentencing. I do not regard the decision in Grocon as relevantly touching upon the correct approach to undertake in this proceeding. In any event, I am bound by the principles propounded by the Full Court in NW Frozen Foods and Mobil Oil, which I do not regard as having been overruled by the High Court in Barbaro.
120. The Applicant respectfully submits that the authorities[48] supporting the practice of regulators making a submission on a range or agreed penalty have not been overruled by the High Court in Barbaro.
[48] NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134 and
121. Other recent decisions of the Federal Court have also taken this position: see Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160, Australian Competition and Consumer Commission v Mandurvit Pty Ltd [2014] FCA 464 and Tax Practitioners Board v Dedic [2014] FCA 511.
THE TOTALITY PRINCIPLE
122. As a final check on the appropriateness of the penalties to be imposed, the Court is required to consider whether the overall penalty is just and appropriate in the circumstances.[49]
[49] Merringtons at [23] per Gray J, [54]-[57] per Graham J, [94]-[102] per Buchanan J. See also Markarian v The Queen (2005) 228 CLR 357 at [83].
123. This requires a final overall consideration of the sum of penalties determining in respect of each contravention or group of contraventions.
124. The principle is designed to ensure that the aggregate of the penalties imposed is not such as to be oppressive or crushing.[50]
[50] Kelly at [30] per Tracey J.
CONSENT DECLARATIONS
125. The principles in relation to the Court’s power to make declarations are set out in Australian Competition and Consumer Commission v EDirect Pty Ltd [2008] FCA 65.[51] They can be summarised as follows:
[51] See also the summary of the principles in AMWU v Sunstate Coatings Pty Ltd [2011] FCA 391 at [2] -[4]
(a)
The Court has a wide discretionary power to make declarations as of right under s 21 of the Federal Court of Australia Act 1976 (Cth).
(b)
The Court is required to scrutinise the order sought to satisfy itself that it has the power to make the orders and that the orders are appropriate. They are to be directed to determining a legal controversy, not a hypothetical question.
(c)
The party seeking a declaration must have a real interest in seeking that relief.
(d)
Sufficient consequences must flow from the making of the declaration before it is appropriate for the court to exercise its discretion. For instance, they may be a public interest in making a declaration that records the Court’s disapproval of particular conduct.
(e)
Because making a declaration is a judicial act, it should only be made on evidence and not simply on admissions or deemed admissions.
(f)
The Court should not impede settlements and will be slow to substitute its own view of the order agreed.
CONCLUSION AND RECOMMENDATION
126. The Applicant submits that the facts and admitted contraventions is this proceeding call for a penalty which has been agreed by the Parties at paragraph 47 of the SOAF.
127. The Parties also agree at paragraph 47 of the SOAF that any penalties imposed on the First and Second Respondents be paid to the Commonwealth pursuant to subsection 546(3)(a) of the FW Act.
128. The Applicant submits that having regard to all the circumstances, including the matters referred to above, the agreed penalties for the two groups of contraventions is within a permissible range and appropriate.”
31. The first and second respondent filed submissions in reply on 27 June 2014:
“To the Applicant's Submissions herein dated 6 June 2014 the
Respondents say as follows and otherwise accept the same:
BACKGROUND (Applicant Paragraph12) 1. Whilst performing his work Lawler had damaged a capping beam.
(See Agreed Facts at Paragraph 26 (a)).
2. The Respondents say that the cause of the said damage was the incompetence of Lawler in controlling the excavator.
(See affidavit of Nikola Maric sworn herein 2013, at
paragraphs 11 to 15 inclusive)3. Therefore Lawler was dismissed from the site by order of the site foreman in view of the perceived risk of injury to himself and others by continuing there. Subject thereto the Respondents admit that they have acted in error an in breach of the statutory requirements per the agreed Facts.
4. The Respondents submit that the Court is assisted in its determination on penalty by due inquiry into the cause of the said admitted damage.
THE TOTALITY PRINCIPLE
(Applicant Submissions Paragraphs 122 to 124 inclusive)
5. Further to the said Submissions the Court is required to consider whether the overall penalty is just and appropriate in the circumstance that the Respondents were responsible for the personal safety of the workers engaged on the worksite including Lawler himself and for the protection of the site from further damage whereas Lawler had damaged the capping beam.
6. Insofar as the Respondents acted with urgency to dismiss Lawler from the site as a health and safety issue and without excusing their failure otherwise to comply with the statutory requirements the Court should in its final consideration make an allowance in their favour.”
Consideration of factors on penalty
32. The S.O.A.F sets out the background to and nature of the unlawful conduct (i.e. the agreed contraventions). Many of the applicable factors for determining the appropriate penalties for the agreed contraventions have been adequately dealt with in the parties’ submissions and the S.O.A.F.
33. It was agreed as a result of the application of the course of conduct provisions in the FW Act there were two separate categories of contraventions by both respondents[52]. The maximum penalties are $66,000 for the first respondent and $13,200 for the second respondent. The adverse action contraventions and the underpayment contraventions cannot go unpunished but did take place over a very short space of time. The size of the underpayment and its rectification along with the respondents’ co-operation are all factors which mitigate against a severe penalty.
[52] See Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62
Agreed penalty
34. In their submissions before the Court the parties indicated they had agreed on the following penalties which were summarised in the Applicant’s submissions as follows:
“106. The Parties agree that the circumstances in which the contraventions occurred and the nature of the conduct require a meaningful penalty to be imposed having regard to the objects of the FW Act and the need for general deterrence in particular.[53]
[53] Merringtons at [53] per Graham J.
107. The Parties are in agreement in relation to the amounts of the penalties that should be imposed on the First and Second Respondents by reason of their admitted contraventions of the FW Act.
108. The Applicant submits, having regard to the 2 identified categories contraventions outlined earlier in these submissions, that the Court should impose penalties within the following monetary range:
(a) $8,000 in respect of the First Respondent; and (b) $2,000 in respect of the Second Respondent. See Annexures A and B respectively.
109. The agreed penalties for the First and Second Respondents represent are at the lower end of the spectrum of the maximum penalties that could be imposed for the two categories of contraventions referred to above. These agreed penalties take into account and acknowledge that fact that:
(a) the contravening conduct took place over a very short period of time; (b) the First and Second Respondents have admitted their contraventions; (c) the size of the underpayment; and (d) the underpayments have been rectified 110. Notwithstanding the agreement of the Parties, the determination of the correct penalty to be imposed on the First and Second Respondents is ultimately a matter for the Court. The task of the Court is to “fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations”.[54]”
[54] Merringtons at [91] per Buchanan J.
35. The principles which should be applied by the Court with respect to an agreed penalty have been set out in a number of decisions of the Federal Court are well established and were referred to by the parties in their submissions.[55] I note 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. In DP World Sydney Limited v Maritime Union of Australia (No.2) [2014] FCA 596 Flick J dealt with proceedings for imposition of a civil penalty where the parties were agreed on the quantum of the penalty and the form of declatory relief. At paragraphs [20] to [25] it was said:
[55] see paras 1-4 of applicant’s submissions and 5-7 of respondent’s submissions
“20. The role of the Court when giving consideration to an agreement between the parties is also well-settled. It is a question which has arisen in a variety of different statutory contexts.
21. In Ministry for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72, (2004) ATPR 41-993 a pecuniary penalty was sought to be imposed upon Mobil by reason of a contravention of s 10 of the Petroleum Retail Marketing Sites Act 1980 (Cth). The parties had prepared a Statement of Agreed Facts. The parties had also reached agreement as to the quantification of a penalty in the sum of $844,500. When focussing attention upon the agreement as to penalty, Branson, Sackville and Gyles JJ referred to the earlier decision of the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 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 s 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 contravenor 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 submissions as to the appropriate penalty to be imposed.
(iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC’s views as to the deterrent effect 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 facts, 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 been disposed to select some other figure. It will be appropriate if within the permissible range.
The Full Court there went on to express a number of further principles, including the following:
[53] First, the rationale for giving weight to a joint submission on penalty is said by the Court to be the savings in resources for the regulator and the Court, as well as the likelihood that a negotiated resolution will include measures designed to promote competition. As Jeremy Thorpe points out, a related advantage is that the savings in resources can be used by the regulator to increase the likelihood that other contraveners will be detected and brought before the courts. This has the effect of increasing deterrence which is one of the principal justifications, if not the only justification for imposing civil penalties under the TP Act or the Sites Act: J Thorpe, “Determining the Appropriate Role for Charge Bargaining in Pt IV of the Trade Practices Act” (1996) 4 Comp & Cons LJ 69, at 72–74. Of course the arguments in favour of negotiated settlements have to take account of the fact that it is the Court that bears the ultimate responsibility for determining the appropriate penalty.
[54] Secondly, the sixth proposition drawn from the reasoning in NW Frozen Foods does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. A Court may wish to take that approach. However, it is open to a Court, consistently with the reasoning in NW Frozen Foods, first to address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgment, determine whether the prepared penalty falls within the range.
…
22. The guidance that these considerations provide in respect to the approach of the Court when dealing with the imposition of penalties for contraventions of industrial legislation is well accepted: e.g., General Manager of Fair Work Australia v Health Services Union [2013] FCA 1306 at [17] to [29] per Middleton J; Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 126 at [41] to [42] per Gilmour J; Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 160 at [23] to [24] per White J.
23. It is respectfully further concluded that the decision of the High Court in Barbaro v The Queen [2014] HCA 2, (2014) 88 ALJR 372 does not require any departure from the approach formerly applied by this Court. Barbaro, supra, was a case about criminal custodial sentencing. In Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, Middleton J, however, noted the potential impact of Barbaro, supra, upon cases involving the imposition of civil penalties as follows:
[114]
However, it is appropriate that I make mention of the recent decision of the High Court of Australia in Barbaro... having the benefit of submissions from the ACCC on the impact of that decision, and having reached my own conclusions on its application to civil penalty proceedings of the type now before me. I appreciate that there is no contradictor.
[115]
On a broad reading of the majority reasoning in Barbaro, and taking in isolation some of the comments made, it might be thought that the Court should not take into account the submissions of the parties as to the ‘agreed’ penalty amount in civil penalty proceedings. However, I do not consider the decision goes that far or that it implicitly overrules Full Court authority applied on numerous occasions in this Court.
His Honour then proceeded to review the differences between “sentencing principles” applicable to criminal proceedings and the principles to be applied when imposing a civil penalty and continued:
[130]
Then, it is to be recalled in the situation confronting me, I have not just been provided with a “bare” statement of range of penalties, or specific penalty, which tells the judge nothing of the conclusions or assumptions upon which the proposed penalty depends (a problem referred to in Barbaro). I have the advantage of submissions of law and an agreed statement of facts (which I regard as sufficient for my task), which go beyond the mere bare expression of opinion by a prosecutor.
[131]
Further, there is still binding Full Court authority in the civil penalty context which supports the practice of civil regulators making submissions as to penalty amount, based upon agreed statement of facts and joint legal submissions from the parties indicating an ‘agreed’ penalty.
[132]
In NW Frozen Foods Burchett and Kiefel JJ surveyed authorities on agreed penalties and concluded that a regulator and respondent could jointly propose specific penalty amounts to the Court. Their Honours emphasised that (provided the Court was satisfied that the proposed amount was appropriate) there was a strong public interest in imposing that penalty, even if the Court may otherwise have selected a different figure for itself.
[133]
The effect of NW Frozen Foods was given further consideration by the Full Court in Mobil Oil, where Branson, Sackville & Gyles JJ surveyed the relevant authorities, including several which had criticised the reasoning in NW Frozen Foods. Their Honours went on to uphold the approach outlined in NW Frozen Foods and to explain and support the reasons for that approach.
[134]
The principles in NW Frozen Foods and Mobil Oil have been followed and applied in subsequent civil penalty cases in the Federal Court.
His Honour ultimately concluded:
[150]
In light of the above observations, I do not consider that the High Court intended to exclude, in a civil context, the making of submissions (joint or otherwise) by the parties as to appropriate orders to make (not just as to penalty, but also as to injunctions and disqualification orders). Without specific mention and consideration, I do not conclude that the High Court implicitly overruled the earlier Full Court decisions of NW Frozen Foods and Mobil Oil.
The parties to the present proceeding jointly submitted that his Honour’s decision should be followed. That submission is accepted. Gratitude is expressed to his Honour for his careful and detailed exposition of the authorities and principles. His decision, with respect, is clearly correct.
24. Notwithstanding the criticism expressed by the Victorian Court of Appeal in Australian Securities and Investments Commission v Ingelby [2013] VSCA 49, (2013) 275 FLR 171, the principles set forth in NW Frozen Foods, supra, and Mobil Oil, supra, remain the principles to be applied in the present case.”
36. It was the position of the parties before the Court that having regard to the above mentioned matters, the details of the agreed contraventions that the penalties the parties had agreed on were within the permissible range in all the circumstances. The parties tendered a minute of proposed orders they asked the Court to make to reflect the penalties on the agreed contraventions.
Conclusion
37. Given the matters referred to above and whilst the penalties agreed to by the parties are at the lower end of the scale. I am prepared to accept the agreed position of the parties on penalty. Balancing the factors referred to I am satisfied that the penalties are appropriate as they are neither manifestly inadequate nor manifestly excessive but within the permissible range. Moreover, and having regard to the S.O.A.F, the conduct involved of the respondents and all of the matters referred to above I am satisfied the proposed orders are appropriate.
38. Therefore, as the Court:
a) is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case;[56] and b) in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria;[57] and c) notes the parties have filed the S.O.A.F and agreed on penalties which are within the permissible range;[58] and d) is satisfied the agreed penalties are just and appropriate[59]; [56] see Construction Forestry Mining & Energy Union v Coal & Allied Operations Pty Ltd (No.2)
[57] see Australian Ophthalmic Supplies Pty Limited v McAlary-Smith (2008) 165 FCR 560
[58] see Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
[59] Ibid
there will be orders as set out at the beginning of these reasons for
decision.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge O’Sullivan
Associate:
Date: 7 July 2014
“Attachment A”
McIver v Healey [2008] FCA 425 at [16] (unreported, Federal Court of Australia, 7 April 2008, Marshall
J)(McIver)
J) (Merringtons)
(Mornington Inn)
J), [71] (Graham J) and [102] (Buchanan J)
Buchanan J
(1992) 175 CLR 564 at 581–582.
[2008] FCA 425 at [16] (unreported, Federal Court of Australia, 7 April 2008, Marshall J).
[56].
Association v International Aviation Service Assistance Pty Ltd [2011] FCA 394 at [14]; however, see the discussion of “instinctive synthesis” and its place in the sentencing process by the High Court in Markarian v R (2005) 228 CLR 357 and the description of the method of instinctive synthesis at [51] per McHugh J.
Safeway Stores (1997) 145 ALR 36 at 53 per Goldberg J; Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Kelly);
Merringtons at [23] per Gray J, [71] per Graham J and [102] per Buchanan J.
18 Fair Work Bill 2008 Explanatory Memorandum at [2190].
[2011] FCA 394 at [21] per Barker J.
[2011] FCA 394 at [19] per Barker J.
Services Union of Australia [2010] FCAFC 150
Merringtons at [12] per Gray J.
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72
(1999) 94 IR 231
4
59
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