Director Of the Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd and Ors (No.2)

[2015] FCCA 2129

FEDERAL CIRCUIT COURT OF AUSTRALIA

DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v BAULDERSTONE PTY LTD & ORS (No.2) [2015] FCCA 2129

Catchwords:
INDUSTRIAL LAW – Contravention of s.346 of the Fair Work Act 2009 (Cth) (FW Act) – taking adverse action against employee because employee was not, or ceased to be a member of a union – application for pecuniary penalties against employer and two employees involved in contravention – principles for assessing pecuniary penalties – payment of pecuniary penalties ordered.

Legislation:

Fair Work Act 2009, ss.346, 546

Building and Construction Industry Improvement Act 2005 (Cth), s.59

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560
Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2; (2014) 253 CLR 58
Channon v The Queen [1978] FCA 16; (1978) 33 FLR 433

Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721

Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543
R v H (1980) 3 A Crim R 53
Ryan v R [2011] NSWCCA 250
Vartokas v Zanker (1989) 51 SASR 277
Wong v The Queen; Leung v The Queen [2001] HCA 64; 207 CLR 584

Applicant: DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE

First Respondent: BAULDERSTONE PTY LTD
ACN 002 625 130

Second Respondent: GREGORY LEMIN

Third Respondent: RAZZ RAZLOG

Fourth Respondent: NICOLE KIDMAN

File Number: SYG 1434 of 2012

Judgment of: Judge Manousaridis

Hearing date: 11 August 2014

Delivered at: Sydney

Delivered on: 7 August 2015

REPRESENTATION

Counsel for the Applicant: Mr M S White SC with Ms I Sethi

Solicitors for the Applicant: Corrs Chambers Westgarth Lawyers

Counsel for the Respondents: Mr B Hodgkinson SC

Solicitors for the Respondents: K&L Gates

ORDERS

1. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the first respondent pay to the Commonwealth a pecuniary penalty in the amount of $25,000.

2. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the third respondent pay to the Commonwealth a pecuniary penalty in the amount of $3,500.

3. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the fourth respondent pay to the Commonwealth a pecuniary penalty in the amount of $3,500.

4. The penalties referred to in orders 1, 2, and 3 be paid within 28 days or within such further time as the applicant agrees or the Court directs.

5. The parties have liberty to apply in relation to the implementation of these orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1434 of 2012

DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE

Applicant

And

BAULDERSTONE PTY LTD ACN 002 625 130

First Respondent

GREGORY LEMIN

Second Respondent

RAZZ RAZLOG

Third Respondent

NICOLE KIDMAN

Fourth Respondent

REASONS FOR JUDGMENT

Introduction

1. On 10 April 2014 I delivered reasons for judgment (Reasons for Judgment) in which I found that each of the first respondent (Baulderstone), the third respondent (Mr Razlog), and the fourth respondent (Ms Kidman) contravened s.346 of the Fair Work Act 2009 (Cth) (FW Act).[1]

   [1] Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721 (Reasons for Judgment)

2. In these reasons, I consider whether I should impose a pecuniary penalty or penalties on any of Baulderstone, Ms Kidman, or Mr Razlog under s.546 of the FW Act and, if so, the amount of the pecuniary penalty or penalties I should impose. There is no issue that the maximum penalty the Court can impose on Baulderstone is $33,000, and the maximum penalty the Court can impose on each of Ms Kidman and Mr Razlog is $6,600.

Principles

1. When assessing a pecuniary penalty for a contravention of a provision of the FW Act, it is necessary to bear in mind the purposes for which pecuniary penalties are imposed.

2. One purpose is punishment or retribution.[2] “Retribution” refers to visiting on the contravener a level of suffering that reflects the nature and gravity of the contravention. Retribution is premised on the view that contraveners “deserve to suffer and that the institution of punishment should inflict the suffering they deserve”, and that “punishment must be equivalent to the level of wrongdoing”.[3] When giving effect to the purpose of retribution the overriding principle is to ensure that the sentence is proportionate to the gravity of the contravening conduct,[4] and it must accord with prevailing standards of punishment.[5] Further, because the purpose of retribution is to inflict the punishment the contravener deserves, the circumstances of the contravention are especially important.[6]

   [2] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [6] (Barker J)

   [3] Bagaric, Mirko; Amarasekara, Kumar --- "The Errors of Retributivism" [2000] MelbULawRw 5; (2000) 24(1) Melbourne University Law Review 125 at 127

   [4] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [5] (Barker J)

   [5] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [6] (Barker J)

   [6] Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93] (Lander J)

3. Another purpose of imposing a pecuniary penalty on a person who contravenes the FW Act is deterrence, both personal and general:[7]

   The pecuniary penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate pecuniary penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The pecuniary 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 pecuniary penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the pecuniary penalty will not operate to deter others from contravening the section. However, the pecuniary penalty should not be such as to crush the person upon whom the pecuniary penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the pecuniary penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.

   [7] Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93] (Lander J)

4. A third purpose is to communicate society’s disapproval of the person’s contravention of the law; it “is the means by which society marks its disapproval of [contravening] conduct”.[8] This purpose is often referred to as denunciation.[9] The degree of disapproval of a given offence, however, is not to be determined by reference to the disapproval of actual members of the community, for the “extent of community abhorrence of a crime or a type of crime is not a matter of evidence”.[10]

   [8] Channon v The Queen [1978] FCA 16; (1978) 33 FLR 433 at 438 ( FCA, Brennan J)

   [9] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 at [72] where the Court refers to the recognition in the field of “white collar” crime of “the more abstract notion of denunciation”.

   [10] R v H (1980) 3 A Crim R 53 at 65 (NSW CCA, Moffitt P)

5. Rehabilitation has been identified as another purpose of imposing a pecuniary penalty.[11] Rehabilitation “is aimed at the renunciation by the offender of his wrongdoing and his establishment or re-establishment as an honourable law abiding citizen”;[12] it is achieved by “reducing or eliminating the factors which contributed to conduct for which” the offender is sentenced.[13]

   [11] Ponzio v BP Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93]

   [12] Vartokas v Zanker (1989) 51 SASR 277 at 279 (King CJ)

   [13] Channon v The Queen [1978] FCA 16; (1978) 33 FLR 433 at 438 ( FCA, Brennan J)

6. Although in any given case one of these purposes may be the pre-eminent purpose for assessing a pecuniary penalty, it need not be the sole purpose. This point was made by the Full Federal Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union:[14]

   We consider that in any system of penalties the various identified purposes of punishment will have greater or less relative significance, depending upon the type of misconduct in question, its prevalence at a particular point in time, difficulty of detection, potential for causing damage and many other considerations. Further, the peculiar circumstances of a particular example of such misconduct may lead to one aspect of punishment being more important in that case than in other cases of the same kind.

   [14] [2015] FCAFC 59 at [71] (Dowsett, Greenwood and Wigney JJ)

7. Courts have identified a number of factors that may be relevant in the circumstances of a particular case to assessing the appropriate pecuniary penalty for contraventions of the FW Act (or the Workplace Relations Act 1996 (Cth)). Factors that are frequently referred to are those Mowbray FM identified in Mason v Harrington Corporation Pty Ltd.[15] These are:

   [15] [2007] FMCA 7. In Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [14] Kenny J adopted this same list of factors as “potentially relevant and applicable”.

   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 party committing the breach;

   e)whether the breaches were properly distinct or arose out of the one course of conduct;

   f)the size of the business enterprise involved, whether or not the breaches were deliberate;

   g)whether senior management was involved in the breaches;

   h)whether the party committing the breach had exhibited contrition;

   i)whether the party committing the breach had taken corrective action;

   j)whether the party committing the breach had cooperated with the enforcement authorities;

   k)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and

   l)the need for specific and general deterrence.

8. Also relevant is the maximum amount of the pecuniary penalties provided for under the FW Act. The Federal Court has held[16] that the following passage from the judgment of Gleeson CJ, Gummow, Hayne, and Callinan JJ in Markarian v The Queen applies to the assessment of pecuniary penalties under the FW Act:[17]

   It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. That having been said, in our opinion, it will rarely be, and was not appropriate for Hulme J here to look first to a maximum pecuniary penalty . . . and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case.

   [16] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 at [108] (Buchanan J)

   [17] [2005] HCA 25; (2005) 228 CLR 357 at [31]

9. Although any one or more of these factors may be relevant to the assessment of a pecuniary penalty in any given case, the factors must not be treated as a checklist.[18] The task of the Court “is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all”.[19] The end result of this task, and the process by which it is arrived at, is referred to as an “instinctive synthesis”.[20] The expression “instinctive synthesis” is used “to make plain that the sentencer is called on to reach a single sentence which . . . balances many different and conflicting features”.[21] This approach is contrasted with that which has the appearance of a mathematical exercise of addition and subtraction, where the sentence is “broken down into some set of component parts”.[22]

   [18] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [10] (Barker J)

   [19] Wong v The Queen; Leung v The Queen [2001] HCA 64; 207 CLR 584 at [75] (Gaudron, Gummow, Hayne JJ)

   [20] See, for example, Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [7] (Barker J)

   [21] Wong v The Queen; Leung v The Queen [2001] HCA 64; 207 CLR 584 at [75] (Gaudron, Gummow, Hayne JJ)

   [22] Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2; (2014) 253 CLR 58 at [34] (French CJ, Hayne, Kiefel, and Bell JJ)

10. There is another danger, however, in assessing penalties by reference to factors such as those identified in Mason. The factors are not expressed in a way that explicitly link them to the purposes for which pecuniary penalties may be imposed. Assessing penalties by systematically considering each of those factors, therefore, may distract a court from properly considering the purposes for which, in a given case, a pecuniary penalty should be imposed. To avoid this danger, when assessing a penalty in a given case, a court should bear in mind the purposes for which a pecuniary penalty should be set. This may be done by asking questions to the following effect: to what extent does the contravener’s conduct, in the circumstances in which it occurred, merit punishment? Is there a risk the contravener will again engage in the same or similar contravening conduct, and can that risk be reduced by the level at which the pecuniary penalty is assessed? Is there a risk that others will engage in similar contravening conduct, and can that risk be reduced by the level at which the pecuniary penalty is assessed? Has the contravener engaged in conduct that calls for the court to express its disapproval of the contravener’s conduct, and can that disapproval be expressed by the level at which the pecuniary penalty is assessed? Is there any scope for rehabilitating a contravener by means of the level at which the penalty is assessed? Factors such as those identified in Mason are relevant to answering these questions. It is important, however, that those factors be linked, or are capable of being linked, in an identifiable chain of reasoning to the purposes for which a pecuniary penalty is set in any given case.

11. The parties before me have arranged their submissions on penalty around the factors identified in Mason. In deference to the manner in which the parties have presented their submissions, I too will largely arrange my reasons by reference to each of the factors referred to in Mason. I will consider these factors, however, having regard to the purposes for which pecuniary penalties are imposed on persons who contravene a provision of the FW Act.

Baulderstone’s contravention - relevant factors

1. In the Reasons for Judgment I found Baulderstone contravened s.346 of the FW Act by Ms Kidman and Mr Razlog requiring Mr Teariki to sign documents that Ms Kidman and Mr Razlog presented to Mr Teariki at a meeting of 25 March 2010. [23] I found that Baulderstone engaged in that conduct for the reason, or for reasons that included as a substantial and operative factor Mr Teariki’s not being, or his ceasing to be a member of the Construction Forestry Mining and Energy Union (CFMEU).[24]

   [23] Reasons for Judgment, [283]

   [24] Reasons for Judgment, [283]

Nature and extent of contravening conduct

1. There are a number of matters that illuminate the nature and extent of Baulderstone’s contravening conduct. First, the conduct was deliberate and concerted; it consisted in the implementation by Ms Kidman and Mr Razlog of the decision Mr Stavrinos made at the meeting of 4 March 2010 that Mr Teariki be taken off the salary contract and put on wages.[25] Second, Ms Kidman and Mr Razlog concealed the true reasons for their conduct by representing to Mr Teariki at the meeting of 25 March 2010 that the reasons he was being required to sign the documents that were presented to him were that his “role as a Safety Officer and being on a salary doesn’t work out” and that Mr Teariki could not perform his role whilst on salary.[26] Third, Mr Teariki did not sign the documents in the exercise of his free choice; he signed them because Ms Kidman and Mr Razlog made it clear to Mr Teariki, and Mr Teariki understood, that he was required to sign the documents.[27] Fourth, Ms Kidman and Mr Razlog insisted Mr Teariki sign the documents even though Mr Teariki told Ms Kidman and Mr Razlog he did not understand why he was going back to wages.[28] Fifth, Ms Kidman and Mr Razlog undertook the contravening conduct in complete disregard of Mr Teariki’s rights under the salary contract. All these are aspects of Baulderstone’s contravening conduct that merit a high level of punishment.

   [25] Reasons for Judgment, [196(a)]

   [26] Reasons for Judgment, [201]

   [27] Reasons for Judgment, [208]

   [28] Reasons for Judgment, [209]

2. The applicant (Director) submits Baulderstone’s contravention demonstrates a blatant disregard of its obligations under s.346 of the FW Act not to prejudice the freedom of association of its employees.[29] The Director also submits that, although the contravening conduct was directed to one employee, Mr Teariki, it was effected through considerable machinations within Baulderstone “suggesting a systematic failure to establish procedures to control disputes in the workplace concerning freedom of association and to protect employees from being taken against them”.[30] Baulderstone, on the other hand, submits there is no evidence to support these submissions.

   [29] Applicant’s Outline of Submissions on Penalty, [19]

   [30] Applicant’s Outline of Submissions on Penalty, [23]

3. While I agree it is reasonable to characterise as a machination the means by which Ms Kidman and Mr Razlog implemented the decision Mr Stavrinos made on 4 March 2010, I accept Baulderstone’s submission that I cannot infer from Baulderstone’s conduct in relation to Mr Teariki that Baulderstone disregarded its employees’ rights of freedom of association in general. I also accept Baulderstone’s submission that I cannot infer from the manner in which the decision of 4 March 2010 was implemented that Baulderstone systematically failed to control disputes in the workplace concerning freedom of association and to protect employees from adverse action being taken against them.

4. Baulderstone submits that the contravening conduct related “to only one employee” which was an “aberration as a result of” Ms Kidman’s and Mr Razlog’s failure to follow Baulderstone’s “established and documented procedures”.[31] Baulderstone further submits that the contravention occurred in circumstances where Ms Kidman and Mr Razlog “were new to their respective roles with” Baulderstone at the time and were “relatively unfamiliar with a range of factors surrounding the issues including the terms of Mr Teariki’s contract, the enterprise agreement and any changes to Mr Teariki’s role from the EBB site to the SA3 site”.[32] There are a number of matters to note about these submissions.

   [31] Respondent’s Outline of Submissions on Penalty, [4.5]

   [32] Respondent’s Outline of Submissions on Penalty, [4.5]

1. First, the submissions attribute Baulderstone’s contravention to Ms Kidman and Mr Razlog. That ignores my finding that Ms Kidman and Mr Razlog undertook the contravening conduct as a result of the decision Ms Stavrinos made at the meeting of 4 March 2010. [33] Even if, therefore, Baulderstone’s correctly characterises Ms Kidman’s and Mr Razlog’s conduct as an aberration, it says nothing about whether Mr Stavrinos’ decision was an aberration. Baulderstone has adduced no evidence from Mr Stavrinos, or from any other source, on the basis of which a rational assessment can be made about whether Mr Stavrinos’ decision was an aberration.

   [33] Reasons for Judgment, [196]

2. Second, it is unclear on what evidence Baulderstone relies for submitting that the contravening conduct was an aberration. Presumably Baulderstone relies on Mr Hanrahan’s evidence that, with the exception of this matter, he had been “informed that [Baulderstone] has never been found to have acted in a manner contrary with its obligations under relevant industrial legislation”.[34] That by itself, however, does not establish that the contravening conduct was an aberration. I found that Mr Rodriguez complained about Mr Teariki’s not being, or ceasing to be, a member of the CFMEU, and that this complaint was a substantial and operative factor in Mr Stavrinos’ decision to direct Ms Kidman and Mr Razlog to take Mr Teariki off the salary contract and to put him on wages.[35] Given this finding, it is conceivable that Mr Stavrinos had a general willingness to attempt to allay concerns officials of the CFMEU may have raised with him about an employee not being a union member. I make no finding that Mr Stavrinos had any such willingness; but I cannot assume without evidence that Mr Stavrinos’ decision on 4 March 2010 in relation to Mr Teariki was an aberration.

   [34] Affidavit of J P Hanrahan, 29.09.2014, [8]

   [35] Reasons for Judgment, [196(e)]

3. Third, it is unclear what “established and documented procedures” Baulderstone says Ms Kidman and Mr Razlog failed to follow. I assume Baulderstone intends to refer to the procedures to which Mr Hanrahan refers in his affidavit.[36] Baulderstone has not identified from these documents, however, the “established and documented procedures” it submits Ms Kidman and Mr Razlog failed to follow. And there is nothing in those documents that immediately suggests the “established and documented procedures” which Ms Kidman and Mr Razlog ought to have followed, but did not follow.

   [36] Affidavit of J P Hanrahan, 29.09.2014, [12]

4. Fourth, Baulderstone’s submission that Ms Kidman and Mr Razlog were “relatively unfamiliar with a range of factors surrounding the issues including the terms of Mr Teariki’s contract, the enterprise agreement and any changes to Mr Teariki’s role from the EBB site to the SA3 site” is inconsistent, not only with my findings in the Reasons for Judgement, but also with the case Baulderstone conducted. The letter dated 20 January 2010 Ms Kidman composed and sent recommending that Mr Teariki be given a salary advance indicates she was aware of Mr Teariki’s actual employment status;[37] and Baulderstone’s case was that Mr Teariki was taken off his salary contract after Ms Kidman and Mr Razlog had conducted investigations about Mr Teariki’s employment. Even ignoring these inconsistencies, Baulderstone’s submission does not identify the “range of factors surrounding the issues” with which it is said Ms Kidman and Mr Razlog were “relative unfamiliar”; nor does Baulderstone articulate how such relative unfamiliarity explains Baulderstone’s contravention of s.346 of the FW Act.

   [37] Reasons for Judgment, [88]

5. Baulderstone submits the evidence shows “there was no attempt by” Ms Kidman and Mr Razlog “to conceal their actions”.[38] It is true Ms Kidman and Mr Razlog did not conceal their actions, for it was through their overt actions that Baulderstone contravened s.346 of the Act. On the findings I have made, however, Ms Kidman and Mr Razlog concealed the reasons for which they acted by representing to Mr Teariki at the meeting of 25 March 2010 that the reasons he was being required to sign the documents that were presented to him were that his “role as a Safety Officer and being on a salary doesn’t work out”, and that Mr Teariki could not perform his role whilst on salary.[39]

   [38] Respondent’s Outline of Submissions on Penalty, [4.6]

   [39] Reasons for Judgment, [201]

6. Baulderstone also submits that the gravity of Baulderstone’s contravening conduct “should be assessed against the fact that the Conduct was not ongoing”. I do not accept that submission. If Baulderstone engaged in any ongoing conduct which involved fresh contraventions of the FW Act then, subject to s.557(1) of the FW Act, a separate penalty would have to be assessed for each contravention in the manner described by the Full Federal Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union:[40]

   The court must fix a fine for each offence and then review the aggregate, considering whether it is just and appropriate, as a reflection of the overall criminality. Such consideration may lead to moderation of the fine imposed in respect of each offence . . . . It is at this stage that it is relevant to consider matters such as whether the separate offences were part of a single course of conduct (or whether the offences may be grouped together in some way as representing separate courses of conduct) and whether there is an overlap between the legal elements of some of the offences.

   [40] [2015] FCAFC 59 at [41]

Circumstances in which conduct took place

1. The Director submits that the particular circumstances of Mr Teariki should be taken into account. The Director submits Mr Teariki was a vulnerable worker because of his shyness, limited education, and lack of understanding of why he was being required to sign the documents that were presented to him at the meeting of 25 March 2010.[41] The Director submits that Baulderstone was aware or ought to have been aware of Mr Teariki’s vulnerability. Baulderstone, on the other hand, submits Mr Teariki was not vulnerable. Baulderstone points to Mr Teariki’s having the confidence to ask for a salary contract, having the determination to resign from the CFMEU, and having the capacity to exercise the responsibilities of a Safety Officer.

   [41] Applicant’s Outline of Submissions on Penalty, [25]

2. The evidence does not permit me to make a finding about whether Mr Teariki was a person who can in general terms be described as “vulnerable”. But that is not relevant in the circumstances of this case. On my findings, Mr Teariki told Ms Kidman and Mr Razlog he could not understand why he was going back to wages, yet, because Ms Kidman and Mr Razlog gave Mr Teariki no choice in the matter, Mr Teariki felt compelled to sign the documents. It is difficult to characterise the position in which Mr Teariki found himself at the meeting of 25 March 2010 as anything other than one of vulnerability; and it is difficult to characterise Ms Kidman’s and Mr Razlog’s succeeding in having Mr Teariki sign the documents as anything other than the exploitation of the vulnerable situation in which Mr Teariki found himself. These are aspects of the circumstances in which contravening conduct occurred that merit punishment.

Nature and extent of any loss or damage

1. Baulderstone submits Mr Teariki suffered no harm, financial or non-financial, as a result of Baulderstone’s contravening conduct. Whether that is so or not, the submission ignores my finding that the contravening conduct constituted the repudiation of Mr Teariki’s contract of employment.[42] That was the loss of a valuable right. The contract reflected what Mr Teariki considered to be best for his interests. That Baulderstone’s trampling of a contract that encapsulated what Mr Teariki considered to be best for his interests did not result in a compensable injury does not mean that no injury was done to Mr Teariki, or that the injury that was done was not significant. I nevertheless accept, however, that Mr Teariki’s not having suffered any financial loss is a factor relevant to the assessment of a pecuniary penalty.

   [42] Reasons for Judgment, [216]

Similar conduct?

1. There is no issue between the parties that Baulderstone has not previously been found to have contravened the FW Act or any similar law.

Size of business enterprise

1. Although this is one of the factors identified in Mason, it is not obvious how the size of the business of a contravener relates to any of the purposes for which a pecuniary may be imposed. Perhaps the idea is that the larger the business, the less excusable would be contravening conduct in which the business may engage; a large business would have the resources to ensure it understands and puts into place procedures that are reasonably necessary to minimise the risk of an officer or employee of the business contravening the FW Act.

2. Baulderstone submits it “had in place management structures, systems and process[es], designed to manage its industrial relations on construction sites”.[43] Baulderstone relies on the evidence of Mr Hanrahan who deposes that “at the relevant time”, namely, 2010 and 2011, Baulderstone “had a number of policies and procedures in place to ensure compliance with the National Code and Implementation Guidelines”. Mr Hanrahan said these included the guidelines contained in three documents he exhibits to his affidavit.

   [43] Respondent’s Outline of Submissions on Penalty, [9.1]

3. The evidence on which Baulderstone relies does not establish that during 2010 it “had in place management structures, systems and process[es], designed to manage its industrial relations on construction sites”.[44] The Director has identified a number of aspects of the documents to which Mr Hanrahan refers which indicate they were either draft or, if not draft, were not used or issued in relation to the EBB or SA3 sites in 2010.[45] More significantly, however, there is no evidence to suggest that Baulderstone implemented the procedures referred to in the documents, at least not at the EBB or SA3 sites. I can place no weight on Mr Hanrahan’s evidence that he was “informed that [Baulderstone] conducted some training for senior staff in relation to the obligations under the Implementation Guidelines”. Mr Hanrahan does not reveal who informed him of those matters, or what training was provided, or to whom the training was provided, or when or where the training was provided. There is no evidence of whether Mr Stavrinos participated in any training, or if he was aware of the documents to which Mr Hanrahan refers.

   [44] Respondent’s Outline of Submissions on Penalty, [9.1]

   [45] Applicant’s Outline of Submissions on Penalty, [21]-[29]

4. It follows that the pecuniary penalty for Baulderstone’s contravening conduct must be assessed on the assumption that it took place in circumstances where Baulderstone, a large enterprise, did not have in place in 2010 any “management structures, systems and process[es], designed to manage its industrial relations on construction sites” or, if it did, they were not structures, systems or procedures of which Mr Stavrinos was aware or which he implemented or followed if he was aware of them.

Whether contravention was deliberate

1. I have already noted that Baulderstone’s contravention was deliberate and concerted. Baulderstone submits, however, that in assessing the deliberateness of the contraventions of all respondents, the Court should consider that I found that Ms Kidman and Mr Razlog acted under direction.[46] I will consider the significance of Ms Kidman and Mr Razlog having acted under direction later in these reasons. That Ms Kidman or Mr Razlog acted under direction, however, does not mean their conduct was not deliberate; it plainly was. And there is no question that Mr Stavrinos’ decision to take Mr Teariki off the salary contract was deliberate.

   [46] Respondent’s Outline of Submissions on Penalty, [10.1]

Whether senior management was involved

1. Baulderstone undertook the contravening decision as a result of the decision Mr Stavrinos made at the meeting of 4 March 2010. Mr Stavrinos was the Operations Manager for Baulderstone in New South Wales and the Australian Capital Territory.[47] He was, therefore, a senior manager. Ms Kidman and Mr Razlog implemented Mr Stavrinos’ decision. Ms Kidman was Baulderstone’s Human Resources Manager for New South Wales and the Australian Capital Territory; and Mr Razlog was employed as Employee Relations Manager for New South Wales and the Australian Capital Territory. There is no question these three employees were senior managers; and it is relevant that two of the three were employed in roles in which they were expected to know, or to make it their business to known, Baulderstone’s obligations under the FW Act.

   [47] Reasons for Judgment, [83]

2. Baulderstone submits Ms Kidman “despite her title of Human Resources Manager, [Ms Kidman] was not considered ‘senior management’” because she “worked under the supervision and direction of” Mr Razlog; and Mr Razlog also “worked under the supervision and direction of Mr Stavrinos”. There is no evidence to suggest Ms Kidman was not considered “senior management”. That she reported to more senior managers does not mean she herself was not a senior manager. In any event, whether or not Ms Kidman and Mr Razlog were “senior managers” has little relevance to the penalty I should impose on Baulderstone; the decision to engage in the contravening conduct was made by Mr Stavrinos, who undoubtedly was a senior manager and who directed Ms Kidman and Mr Razlog to engage in the contravening conduct.

Contrition and corrective action

1. The Director submits that Baulderstone has expressed no remorse or regret. Baulderstone accepts that is so. It appears to submit, however, that it need not have done so because Baulderstone “no longer operates in the same manner that it did in 2010”. Accepting, however, that Baulderstone no longer operates in the same manner as it did in 2010 does not mean it is a different legal person. It remains responsible for the contravening conduct that occurred in 2010. To the extent the expression of contrition is relevant, therefore, it remains relevant even where the personnel and the nature of the business of the contravening corporation have changed after the contravention.

2. I do not, however, place any weight on the absence of contrition or remorse on the part of Baulderstone. Remorse for contravening the law, assuming it is genuine, is relevant to the assessment of a pecuniary penalty because it tends to reduce the need for specific deterrence.[48] For reasons to which I refer later, the circumstances of this case do not call for the setting of a penalty on Baulderstone that reflects the need for specific deterrence.

   [48] “Remorse is, after all, relevant only if indicative of rehabilitation and a willingness to leave criminal life behind.” (Ryan v R [2011] NSWCCA 250 at [59])

3. The Director also submits Baulderstone has taken no corrective action such as counselling managers in human resources to ensure such conduct does not occur, and communicating with employees to assure them adverse action will be taken against employees who are not union members.[49] Baulderstone, on the other hand, relies on the guidelines and processes it currently uses.[50] Given that Baulderstone no longer employs Mr Stavrinos, Ms Kidman, and Mr Razlog, and there is no evidence of any other instances of conduct similar to the contravening conduct, there is no need for Baulderstone now to undertake any corrective action.

   [49] Applicant’s Outline of Submissions on Penalty, [46]

   [50] Respondent’s Outline of Submissions on Penalty, [12.4]

Cooperation with enforcement authorities

1. The degree to which a person has co-operated with law enforcement authorities is relevant in two ways. First, where the co-operation results in the contravener revealing information that indicates a contravention has occurred, or where the co-operation results in the contravener admitting he or she contravened the law, that would indicate genuine remorse by the contravener. That, in turn, would be relevant to whether the pecuniary penalty should reflect an element for specific deterrence. Second, admitting a contravention will save the community the costs of a trial. That would weigh in favour of leniency.

2. Baulderstone submits a number of matters should be taken into account when considering whether it cooperated with law enforcement authorities:[51]

   a)Baulderstone provided documents in response to six notices to produce.

   b)Baulderstone provided documents in response to informal requests.

   c)A number of its employees participated in voluntary interviews with the then Australian Building and Construction Commission (ABCC), including Ms Kidman, Mr Razlog, and Mr Lemin.

   d)Baulderstone took the matters raised by what became the allegations in these proceedings “very seriously”; when it was informed of the investigation, Baulderstone instructed Mr Phillips, a solicitor, “to advise and undertake enquiries”. Mr Phillips assisted Baulderstone in its response to notices to produce issued by the ABCC and “supported various employees . . . when they attended the voluntary interviews”. Mr Phillips also “interviewed a number of employees employed by [Baulderstone], including Mr Teariki”.

   [51] Respondent’s Outline of Submissions on Penalty, [13.1]

3. I do not accept that any of these matters provide evidence of any relevant cooperation by Baulderstone with the enforcement authorities. First, Baulderstone was legally obliged to comply with notices validly issued under s.59 of the Building and Construction Industry Improvement Act 2005 (Cth). Its producing documents in answer to a legally compulsory process cannot be regarded as cooperation in any relevant sense.

4. Second, Baulderstone has not put in evidence the notices that were issued to it, and the documents that Baulderstone produced in answer to those notices. In the absence of such evidence, I am not prepared to assume that Baulderstone produced all documents called by the notices. In particular, there is no evidence that would permit me to determine whether the notices to produce called for documents that included the documents which, in the Reasons for Judgment, I found undermined Baulderstone’s case as to the reasons for which it claimed it took Mr Teariki off the salary contract and, if so, whether Baulderstone produced those documents. The documents are the email Ms Kidman sent on 20 January 2010 to Baulderstone’s “General Manager, HR, Safety & Sustainability”,[52] Ms Kidman’s letter dated 20 January 2010 to Mr Teariki,[53] and Ms Kidman’s diary entry of the meeting she attended on 4 March 2010 with Mr Stavrinos and Mr Razlog.[54]

   [52] Reasons for Judgment, [88]

   [53] Reasons for Judgment, [89]

   [54] Reasons for Judgment, [130]

5. Third, although Ms Kidman, Mr Razlog, and Mr Lemin participated in interviews with the ABCC, there is no evidence that Baulderstone made available the decision-maker, Mr Stavrinos, to be interviewed by the ABCC. The investigation took place in 2010. Mr Stavrinos was employed by Baulderstone at that time; he was made redundant on 1 April 2011.[55] In the absence of evidence that Baulderstone made available Mr Stavrinos to be interviewed by the ABCC, it is impossible to conclude Baulderstone co-operated in a relevant way with the enforcement authorities.

   [55] Affidavit of L C Shanahan, 29.07.2014, [5]

6. Further, there is no evidence of what Ms Kidman, Mr Razlog, or Mr Lemin said to the ABCC during their interviews. If Ms Kidman and Mr Razlog gave to the ABCC evidence of the reasons for the action they took against Mr Teariki that was to the same effect as the evidence they gave at the hearing before me, it was evidence I found did not reflect the true reasons for which Baulderstone acted. In those circumstances, it would be inaccurate to describe Ms Kidman’s and Mr Razlog’s voluntary appearance before the ABCC as cooperation.

1. Fourth, I can accept that Baulderstone took the investigation “very seriously”, and that it engaged Mr Phillips to undertake an investigation. I do not accept, however, that Baulderstone engaged Mr Phillips to undertake an investigation into the truth of the matters which were the subject of the investigation with a view to disclosing the truth to law enforcement authorities. If that were the purpose of Mr Phillips’ investigations, he would surely have interviewed the decision-maker, Mr Stavrinos. There is no evidence he did. Further, although Baulderstone submits Mr Phillips “interviewed a number of employees employed by [Baulderstone], including Mr Teariki”, Mr Phillips, in his affidavit, only refers to his interviewing one employee, Mr Teariki.

Need to ensure compliance with minimum standards

1. It is difficult to see how this operates as an independent factor. That is reflected in Baulderstone relying in support of this factor on matters on which it relies in support of other factors. Thus, Baulderstone submits that none of the respondents have been found to have previously contravened the FW Act or equivalent legislation; the breach arose from a single course of conduct, Baulderstone no longer employs Ms Kidman or Mr Razlog, and that the management systems that were in place in 2010 have been replaced.

Deterrence

1. I am satisfied, for the reasons Baulderstone submits, there is no need for any penalty to reflect specific deterrence.[56] Although Baulderstone submits that any penalty should also not reflect general deterrence, it relies only on matters that are specific to Baulderstone, and, in particular, matters associated with Lend Lease having acquired Baulderstone, and implementing changes that reflect the manner in which Lend Lease conducts its operations. Nevertheless, there is need for a penalty to reflect general deterrence.

   [56] Respondent’s Outline of Submissions on Penalty, [15.1]

Baulderstone’s contravention – appropriate penalty

1. Baulderstone’s contravening conduct, in the circumstances in which it occurred, merits a high level of punishment. Baulderstone engaged in the contravening conduct deliberately and concertedly. The conduct was the product of the decision of a senior manager, and was implemented by two subordinate, but, nevertheless, senior managers. It was directed to coercing an employee to abandon a contract of employment the employee freely negotiated with Baulderstone. And the conduct was accompanied by the concealment of the reason or reasons for which Baulderstone engaged in the conduct.

2. There is no scope for reducing the merited punishment on account of any cooperation by Baulderstone with law enforcement authorities; there is no evidence Baulderstone co-operated in any relevant way. There is no need for the penalty to include a component for specific deterrence. There is, therefore, also no need for the penalty to reflect an element for rehabilitation. There is, however, a need for the penalty to reflect general deterrence. The penalty should reflect Mr Teariki’s not suffering any financial loss as a result of the contravening conduct. The penalty should also reflect Baulderstone’s not having previously been found to have contravened the FW Act or similar legislation. Finally, well-informed members of the community would regard Baulderstone’s conduct in relation to Mr Teariki to be unacceptable, and deserving of denunciation. The penalty, therefore, should also reflect an element of denunciation.

3. In these circumstances, I am of the opinion it is appropriate that I impose on Baulderstone a pecuniary penalty of $25,000. I propose, therefore, to order that Baulderstone pay a pecuniary penalty in that amount.

Ms Kidman

1. I found Ms Kidman participated in Baulderstone’s contravening conduct because it was through her and through Mr Razlog’s agency that Baulderstone undertook that conduct.[57] I also found that Ms Kidman knew that the conduct she undertook was for reasons that included as a substantial and operative factor Mr Teariki’s not being or having ceased to be a member of the CFMEU.[58] For those reasons, I found Ms Kidman was involved in Baulderstone’s contravention of s.346 of the FW Act and is taken, therefore, herself to have contravened s. 346 of the FW Act.

   [57] Reasons for Judgment, [250]

   [58] Reasons for Judgment, [255]

2. Given that Baulderstone’s contravening conduct occurred through the agency of Ms Kidman and Mr Razlog, most of my findings in relation to Baulderstone’s contravening conduct apply to Ms Kidman. Her conduct was deliberate; it formed part of concerted conduct directed to coercing Mr Teariki to abandon his salary contract; Ms Kidman concealed the purposes for which she required Mr Teariki to sign the documents; and she required Mr Teariki to sign the documents in the face of Mr Teariki telling her he did not understand why he was being put on wages. These are matters that merit punishment in the form of the imposition of a pecuniary penalty.

3. There is no evidence Ms Kidman cooperated in any relevant sense with enforcement authorities. Ms Kidman participated in a voluntary interview by the ABBC; but there is no evidence of what she told the ABCC. There are, however, mitigating factors. Ms Kidman has not previously been found to have contravened the FW Act or any similar legislation; and Mr Teariki did not suffer any financial loss as a result of Ms Kidman’s contravening conduct.

4. There are matters that are relevant to the penalty that should be set for Ms Kidman (and Mr Razlog) that are not relevant to Baulderstone. The first is that Ms Kidman did not originate the contravening conduct; Mr Stavrinos did. He decided that the contravening conduct should occur, and he directed Ms Kidman and Mr Razlog undertake it. By itself, that is a factor that reduces Ms Kidman’s level of culpability; but there are countervailing factors.

5. There is no suggestion Ms Kidman was not aware that, under the law, an employee was not obliged to be or remain a member of a union; and there is no evidence Ms Kidman believed that the contravening conduct was lawful or, at any rate, proper. Her having concealed from Mr Teariki the purpose for which she and Mr Razlog required Mr Teariki to abandon his salary contract betrayed a consciousness that the contravening conduct was at the very least improper. Ms Kidman had the choice of informing Mr Stavrinos that his decision was improper; and she would have had the choice of not implementing Mr Stavrinos’ decision had Mr Stavrinos insisted on implementing his decision in the face of any opposition from Ms Kidman.

6. In making these observations, I do not overlook the practical realities of power that may have existed in Baulderstone when the contravening conduct occurred. An employee in a subordinate position puts himself or herself at risk by disagreeing with a superior who has the power to affect the career of the employee. The extent of such risk in any organisation depends on the character of the superior, the extent of the actual and de facto power and influence the superior wields or is capable of wielding over the employee in particular and throughout the organisation as a whole, the extent to which the organisation has effective procedures which protect a subordinate who expresses disagreement with a superior, and the general culture of the organisation. Thus, although Ms Kidman had the choice of not implementing Mr Stavrinos’ decision, she may well have faced risks if she expressed disagreement with that decision or if she had refused to implement the decision.

7. Ms Kidman, however, has led no evidence on these matters. She has led no evidence about whether she considered disagreeing with Mr Stavrinos’ decision and, if not, why she did not. That she did not do so may be due to her not having been advised that these were matters that may have been relevant to the assessment of penalty. There is in evidence an email Ms Kidman and Mr Razlog received on 23 July 2014 from the firm of solicitors who represented and I assume still represent Baulderstone, Ms Kidman, and Mr Razlog.[59] After stating that Ms Kidman and Mr Razlog had an opportunity to put on evidence to be considered by the Court on the question of penalty, the email stated that the matters Ms Kidman’s and Mr Razlog’s evidence would address would include their understanding of the right of freedom of association and workplace protections, steps Ms Kidman and Mr Razlog may have taken to further their understanding of freedom of association and workplace protections, and any approach Ms Kidman and Mr Razlog now adopt to ensure they do not impinge on an employee’s freedom of association or workplace protections.

   [59] Exhibit A

8. Whatever the reason may be for Ms Kidman not putting on evidence about whether she considered disagreeing with Mr Stavrinos’ decision and, if not, why she did not, in the absence of such evidence I propose to assess the pecuniary penalty on the basis that Ms Kidman had a choice of not implementing the decision, but failed to exercise that choice. That would to a considerable extent counteract the mitigating factor that she did not originate the contravening conduct. Another counteracting factor is general deterrence. The pecuniary penalty should incorporate an element of general deterrence to deter persons in subordinate positions from complying with directions from superiors to engage in conduct that may involve contraventions the FW Act.

9. The second matter that is relevant to Ms Kidman, but not Baulderstone, is Ms Kidman’s having expressed contrition. The contrition is expressed in an affidavit made by Ms Kidman on 28 July 2014. In that affidavit Ms Kidman says Baulderstone’s solicitors informed her of the Reasons for Judgment, and that she read it. Ms Kidman then said that I had determined, among other things, that Ms Kidman and Mr Razlog had taken adverse action against Mr Teariki when she and Mr Razlog required Mr Teariki to sign documents that resulted in the termination of his contract for a reason that included his not being or ceasing to be a member of the CFMEU. Ms Kidman then stated:[60]

   As a consequence of reading the decision I understand that my actions in March 2010 were in breach of s346 of the Act. I now understand that the actions I took in requiring Mr Teariki to sign the three forms which resulted in the termination of his salary contract resulted in a loss to him being the loss of the contract. I also understand that my consideration of the fact that Teariki resigned his union membership as part of this process was a breach of the Act.

   I also have a better understanding to the freedom of association provisions of the Act. All employees have the freedom to choose whether they want to be a member of a union or industrial association or not. That choice cannot have any impact on their employment.

   [60] Affidavit of N Kidman, 28.07.2014, [4]-[5]

10. Ms Kidman then describes in some detail activities in which she has participated which are relevant to her having knowledge of the FW Act and compliance with its provisions. These matters are set out under the heading “Corrective Action”. Also in that section of her affidavit, Ms Kidman says:[61]

    My involvement in this matter has also assisted me in my understanding of my breach of the Act. One of my responsibilities was assisting with the coordination of the production of documents in response to Notices issued by the then Australian Building and Construction Commission (ABCC). I also participated in a voluntary interview with the ABCC. . . .

    [61] Affidavit of N Kidman, 28.07.2014, [11]

11. Then, under the heading “Contrition”, Ms Kidman states:[62]

    I regret all my actions associated with the decisions taken by me in February and March 2010 and feel remorse for such actions.

    [62] Affidavit of N Kidman, 28.07.2014, [12]

12. I place little weight on this affidavit. It does not contain matters which could explain why Ms Kidman implemented a decision to engage in conduct in circumstances where it has not been suggested she believed the conduct was lawful. This reduces the ability to assess whether there is any prospect Ms Kidman would again engage in contravening conduct if she were directed to do so.

13. In any event, the fact that I place little weight on the affidavit does not matter; the affidavit can only be relevant to whether there is any need to include in the penalty an element for specific deterrence. I accept the submission made on behalf of Ms Kidman that the opprobrium of having being “prosecuted” as an individual, and the findings I have made in the Reasons for Judgment “is specific enough deterrent”.[63] The pecuniary penalty, therefore, should not include an element for specific deterrence. There is, therefore, also no need for the penalty to reflect an element for rehabilitation.

    [63] Respondent’s Outline of Submissions on Penalty, [18.7]

14. In my opinion, $3,500 is the appropriate pecuniary penalty I should impose on Ms Kidman. I propose, therefore, to order that Ms Kidman pay a pecuniary penalty in that amount.

Mr Razlog

1. I found Mr Razlog participated in Baulderstone’s contravening conduct because it was through him and through Ms Kidman’s agency that Baulderstone undertook that conduct.[64] I also found that Mr Razlog knew that the conduct he undertook was for reasons that included as a substantial and operative factor Mr Teariki’s not being or having ceased to be a member of the CFMEU.[65] For those reasons, I found Mr Razlog was involved in Baulderstone’s contravention of s.346 of the FW Act and is taken, therefore, himself to have contravened s. 346 of the FW Act.

   [64] Reasons for Judgment, [250]

   [65] Reasons for Judgment, [257]

2. Much of what I have said about Baulderstone and Ms Kidman applies to Mr Razlog. Mr Razlog’s conduct was deliberate; it formed part of concerted conduct directed to coercing Mr Teariki to abandon his salary contract; he concealed the purposes for which Mr Teariki was required to sign the documents; and he joined in requiring Mr Teariki to sign the documents in the face of Mr Teariki stating he did not understand why he was being put on wages. These are matters that merit punishment in the form of the imposition of a pecuniary penalty.

3. There is no evidence Mr Razlog cooperated in any relevant sense with enforcement authorities. Mr Razlog participated in an interview with the ABBC; but there is no evidence of what he told the ABCC. There are, however, mitigating factors. Mr Razlog has not previously been found to have contravened the FW Act or any similar legislation; and Mr Teariki did not suffer any financial loss as a result of Mr Razlog’s contravening conduct.

4. Mr Razlog undertook the contravening conduct under the direction of Mr Stavrinos. By itself, that would be a mitigating factor. Mr Razlog, however, has put on no evidence about whether he expressed any disagreement with Mr Stavrinos’ decision, and if he did, why he nevertheless carried out Mr Stavrinos’ decision. As with Ms Kidman, this may be due to Mr Razlog not having been advised of the potential relevance of such matters. Whatever the reasons Mr Razlog put on no such evidence, I should assess the penalty Mr Razlog should pay on the basis that he had a choice of not implementing the decision, but failed to exercise that choice. That would to a considerable extent counteract the mitigating factor that Mr Razlog did not originate the contravening conduct. Another counteracting factor is general deterrence; the pecuniary penalty should incorporate an element of general deterrence to deter persons in subordinate positions from complying with directions from superiors to engage in conduct that may involve contraventions the FW Act.

5. Mr Razlog made an affidavit in which he expresses contrition. Mr Razlog’s affidavit follows the same pattern as Mr Kidman’s affidavit. Its wording, however, is different. Mr Razlog says that after reading the Reasons for Judgment he has “a better understanding of how my actions were in breach of s346 of the Act”.[66]

   [66] Affidavit of D Razlog, 28.07.2014, [4]

6. I place little weight on this affidavit. It does not contain matters which could explain why Mr Razlog implemented a decision to engage in conduct in circumstances where it has not been suggested he believed the conduct lawful. This reduces the ability to assess whether there is any prospect Mr Razlog would again engage in contravening conduct if he were directed to do so.

7. That I place little weight on Mr Razlog’s affidavit, however, does not matter. The affidavit is only relevant to whether there is any need to include in the penalty an element for specific deterrence. I accept the submission made on behalf of Ms Razlog that the opprobrium of having being “prosecuted” as an individual, and the findings I have made in the Reasons for Judgment “is specific enough deterrent”.[67] The penalty, therefore, should not include an element for specific deterrence. There is, therefore, also no need for the penalty to reflect an element for rehabilitation.

   [67] Respondent’s Outline of Submissions on Penalty, [18.7]

8. In my opinion, $3,500 is the appropriate pecuniary penalty I should impose on Mr Razlog. I propose, therefore, to order that Mr Razlog pay a pecuniary penalty in that amount.

To whom should the penalties be paid?

1. The Director submits that any penalties that I order be paid should be paid to Mr Teariki pursuant to s.546(3)(c) of the FW Act. He submits that although Mr Teariki did not suffer financial loss, he did suffer the loss of the benefit of the salary contract. The Director also submits that Mr Teariki had to cooperate with the Director in bring this claim, and was subject to the stress and inconvenience of giving evidence in the proceedings.

2. I am not satisfied these are reasons for which I should order that the pecuniary penalties be paid to Mr Teariki. The FW Act provides for the making of orders awarding compensation for a loss a person has suffered because of a contravention of a civil remedy provision. It would be an inappropriate exercise of the power conferred by s.546(3)(c) of the FW Act to order that penalties be paid to persons who have suffered some injury but who cannot establish a case for the awarding of compensation under the FW Act. And the stress and inconvenience that Mr Teariki may have endured for the purposes of these proceedings are of the same nature as the stress and inconvenience that most persons who cooperate in the bringing of actions for the payment of pecuniary penalties under the FW Act would endure.

3. I propose, therefore, to order that the pecuniary penalties be paid to the Commonwealth. I will also order that the penalties be paid within 28 days or within such longer time as the Director may agree or the Court may direct.

I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date: 7 August 2015