Fair Work Ombudsman v HW Carpentry Solutions Pty Ltd
[2016] FCCA 3283
•21 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v HW CARPENTRY SOLUTIONS PTY LTD & ANOR | [2016] FCCA 3283 |
| Catchwords: INDUSTRIAL LAW – Determination of penalties in relation to admitted contraventions of Fair Work Act 2009 (Cth) including breach of Order of the Fair Work Commission – agreed statement of facts – submissions in relation to appropriate penalty – parties agree on penalty in relation to both Respondents. |
| Legislation: Fair Work Act 2009 (Cth), ss.392, 405, 550(1) & (2) |
| Cases cited: Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (2001) ATPR 41-815 Australian Ophthalmic Supplies Limited v McAlary-Smith (2008) 165 FCR 560 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2016) 326 ALR 476; (2016) 255 IR 87 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | HW CARPENTRY SOLUTIONS PTY LTD ACN 162 180 823 |
| Second Respondent: | HEATH PATRICK FRANCIS WRIGHT |
| File Number: | CAG 77 of 2014 |
| Judgment of: | Judge Neville |
| Hearing date: | 10 February 2016 |
| Date of Last Submission: | 23 May 2016 |
| Delivered at: | Canberra |
| Delivered on: | 21 December 2016 |
REPRESENTATION
| Solicitors for the Applicant: | Office of Fair Work Ombudsman, Melbourne |
| Solicitors for the Respondents: | Chamberlain’s Law Firm, Canberra |
ORDERS:
THE COURT DECLARES THAT:
The First Respondent contravened section 405 of the Fair Work Act 2009 (Cth) (“the FW Act”) by contravening a term of an Order.
The Second Respondent was involved in the First Respondent's contravention of section 405 of the FW Act pursuant to subsection 550(1) of the FW Act.
THE COURT ORDERS THAT:
Pursuant to section 545(2)(b) of the FW Act, the First Respondent pay compensation to Mr Hourigan in the amount of $7,650.00 within 14 days of the date of these Orders.
Pursuant to section 547(2) of the FW Act, the First Respondent pay interest to Mr Hourigan at the applicable pre-judgment rate on the amount referred to in Order 3 within 14 days of the date of these Orders.
Pursuant to section 546(1) of the FW Act, the First Respondent pay $32, 136 as a pecuniary penalty for the Admitted Contraventions.
Pursuant to section 546(1) of the FW Act, the Second Respondent pay $6,426 as a pecuniary penalty for the Admitted Contraventions.
Pursuant to section 546(3)(a) of the FW Act, the First Respondent pay its penalty to the Commonwealth within 28 days of the date of these Orders.
Pursuant to subsection 546(3)(c) of the FW Act, the Second Respondent pay its pecuniary penalty to Mr Hourigan in 12 equal monthly instalments, commencing within 14 days of the date of these Orders.
Within three months of the date of the Court's order, the Second Respondent will undertake workplace relations compliance training on the following terms:
(a)The Training will relate to compliance with the Fair Work Act, and must at a minimum cover employer obligation in respect of termination of employment, unfair dismissal and redundancy;
(b)The Training will be conducted by an accredited training provider or employment law specialist and will be paid for by the First Respondent or the Second Respondent;
(c)The Second Respondent will provide evidence of:
(i)The date of which the Training was completed;
(ii)The name of the person or organisation that conducted the Training; and
(iii)The training materials used and information delivered in the course of the Training;
to the Applicant within 14 days of the Training being provided.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAG 77 of 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| HW CARPENTRY SOLUTIONS PTY LTD ACN 162 180 823 |
First Respondent
| HEATH PATRICK FRANCIS WRIGHT |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Having reached agreement in relation to liability, with the First Respondent having admitted to contravening s.405 of the Fair Work Act 2009 (Cth) (“the FW Act”), and the Second Respondent having admitted to contravening s.550(2) of the FW Act, the only issue before the Court is to determine an appropriate penalty.
The parties have agreed to and provided to the Court a Statement of Agreed Facts, dated 4th May 2015. There was some hiatus between the filing of same and the determination of the matter because all agreed that the High Court decision in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (“Commonwealth v Director, Fair Work”) should be delivered prior to the parties filing written submissions regarding penalty in the light of it.[1] Subject to what is said later in these reasons, in general terms, the High Court said that a Court is not precluded from receiving an agreed or other submission in relation to the amount of a pecuniary penalty to be imposed for contraventions of the FW Act.
[1] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2016) 326 ALR 476.
Via a consent minute, forwarded to Chambers on 21st January 2016, the parties agreed that the issue of penalty would be determined on the basis of written submissions.
What follows are (a) the Statement of Agreed Facts, (b) the parties’ submissions, and (c) the Court’s consideration and disposition of the matter. Summarily stated, the Court (i) accepts the Orders proposed by the parties in relation to the declarations to be made regarding the contraventions admitted, (ii) accepts the amount to be paid to Mr Hourigan (plus interest and the time within which payment is to be made),[2] and (iii) accepts the general “range” for the penalty to be imposed on the First Respondent as set out in par.27(b) of the Statement of Agreed Facts (“the Statement”).
[2] Mr Hourigan was a first year adult apprentice formerly employed on a full-time basis by the First Respondent. His employment was terminated, following which he commenced proceedings with the Fair Work Commission for unfair dismissal.
Statement of Agreed Facts
The Statement of Agreed Facts, filed by the parties on 4th May 2015, was in the following terms:
1. This Statement of Agreed Facts is made by the parties in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).
A THE APPLICATION
2. On 4 December 2014, the Applicant filed an Application and Statement of Claim in this Court against the First and Second Respondents in respect of the First Respondent's contravention of an order· of the Fair Work Commission (Commission) and the Second Respondent's involvement in that contravention.
B ADMITTED CONTRAVENTION AND AGREED DECLARATIONS
3. The First Respondent admits to contravening section 405 of the Fair Work Act2009 (Cth) (FW Act), by contravening a term of an order of the Commission made on 22 August 2014 pursuant to section 392 of the FW Act and requiring payment ·of $1,650 in compensation to Mr Ryan Hourigan within 14 pays (Admitted Contravention).
4. The Second Respondent admits he was involved, within the meaning of subsection 550(2) of the FW Act, in the First Respondent's Admitted Contravention, as described in paragraph 3 above.
C THE PARTIES AND THE EMPLOYEE
The Applicant
5. The Applicant is and was at all material times:
(a) a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to Division 2 of Part 5-2 of the FW Act;
(b) a Fair-Work inspector pursuant to section 701 of the FW Act; and
(c) a person with standing under section 539(2} of the FW Act to apply for orders in respect of contraventions of civil remedy provisions under the FW Act.
The First Respondent
6. HW Carpentry Solutions Pty Ltd (ACN 162 180 823):
(a) is, and was at all relevant times from 1 February 2013 a company Incorporated under the Corporations Act 2001 (Cth);
(b) is capable of being sued in its corporate name;
(c) is a constitutional corporation within the meaning of section 12 of the FW Act; and
(d) at all relevant times, was a national system employer within the meaning of section 14 of the FW Act.
7. The First Respondent employed Mr Ryan Paul Hourigan (Mr Hourigan) from 1 February 2013 to 7 February 2014 (the Employment Period).
8. The First Respondent operated a carpentry business, performing on-site work at building and construction sites.
9. The First Respondent not currently trading.
The Second Respondent
10. Heath Patrick Francis Wright (Mr Wright), is and was at all relevant times:
(a) a natural person capable of being sued;
(b) the sole director of the First Respondent;
(c) the secretary of the First Respondent; and
(d) the sole shareholder of the First Respondent.
The Employee
11. During the Employment Period, the First Respondent employed Mr Hourigan as a first year adult apprentice on a full-time basis.
12. On or around 7 February 2014, the First. Respondent terminated Mr Hourigan’s employment.
D COMMISSION PROCEEDINGS
13. Mr Hourigan lodged an application dated 28 February 2014 for an unfair dismissal remedy with the Commission, pursuant to section 394 of the FW Act, in respect of the termination of his employment by the First Respondent (Proceedings U201415141).
14. On 23 April 2014, the Commission found that Mr Hourigan was protected from unfair dismissal, within the meaning of Division 2, Part 3-2 of the FW Act, at the time of his termination of employment.
15. On 22 August 2014, the Commission found that
a. the termination of Mr Hourigan's employment was harsh, unjust or unreasonable;
b. reinstatement of Mr Hourigan was inappropriate; and
c. an award of compensation to Mr Hourigan was appropriate.
16. On 22 August 2014, the Commission made an order pursuant to section 392 of the FW Act against the First Respondent (Order).
17. The terms of the Order were that the First Respondent shall pay Mr Hourigan the sum of $7,650 within 14 days from the date of the Order.
E CONTRAVENTION OF ORDER
18. The Commission gave the Order to the First and Second Respondent by email on 22 August 2014.
19. The First Respondent did not make any payment to Mr Hourigan within 14 days of the date of the Order.
20. By reason of the matters agreed ln paragraph 19 above, the First Respondent contravened a term of the Order and, as a result, contravened section 405 of the FW Act.
F ACCESSORIAL LIABILITY
21. At all relevant times, the Second Respondent:
(a) the controlling mind of the First Respondent; and
(b) the person who terminated Mr Hourigan's employment, on behalf of the First Respondent.
22. At all relevant times, the Second Respondent was the person who, in respect of the Commission proceeding U2014/5141:
(a) was the nominated contact person for the First Respondent;
(b) lodged documentation on behalf .of the First Respondent;
(b) communicated with the Commission on ·behalf of the First Respondent; and
(c) made decisions on behalf of the First Respondent.
23. The Second Respondent had actual knowledge of the existence and terms of the Order.
24. The Second Respondent:
a. had actual knowledge of the Admitted Contravention; and
b. was an intentional participant in the Admitted Contravention.
25. By reason of the matters agreed in paragraphs 6 and 21 to 24 above, the Second Respondent:
a. was knowingly concerned and involved in (within the meaning of subsection 550(2) of the FW Act) .the Admitted Contravention; and
b. by reason of subsection 550(1) of the FW Act, is taken to have contravened section 405 of the F.W Act.
G COMPENSATION
26. By reason of the Admitted Contravention, the First Respondent owes Mr Hourigan the amount of $7,650.
H AGREED RECOMMENDATIONS
Penalties
27. The Applicant and the Respondents' agree to recommend to the Court the following in respect of the imposition of penalties:
(a) the penalties be imposed by the court in the range .of 70% of the maximum penalty, less a discount of 10% to take into account the Respondents' cooperation;
(b) The total penalties to be imposed by the Court in relation to the Admitted Contraventions, if the Court were to accept the recommendation in subparagraph (a) above, would result In penalties in the range of:
(ii) $32, 136 for the First Respondent; and
(iii) $6,426 for the Second Respondent.
Orders
28. The Parties have agreed to recommend to the Court that it make the following declarations:
(a) A declaration that the First Respondent contravened section 405 of the FW Act by contravening a term of the Order;
(b) A declaration that the Second Respondent was involved in the First Respondent's contravention of section 405 of the FW Act pursuant to subsection 550(1) of the .FW Act.
29. The Parties have agreed to recommend to the Court that it make the following orders:
(a) An order pursuant to section 545(2)(b) of the FW Act that the First Respondent pay compensation to Mr Hourigan in the ·amount of $7,650 within 14 days of the date of the order;
(b) An order pursuant to section 547(2) of the FW Act that the First Respondent pay interest to Mr Hourigan at the applicable pre-judgment rate on the amount referred to In paragraph 28(b) above within 14 days of the date of the order;
(c) An order pursuant to subsection 546(1) of the FW Act imposing a pecuniary penalty on the First Respondent and Second Respondent for the Admitted Contraventions;
(d) An order pursuant to subsection 546(3)(a) of the FW Act that the First Respondent pay its penalty to the Commonwealth within 28 days of the Court's order.
(e) An order pursuant to subsection 546(3)(c) of the FW Act that the Second Respondent pay its pecuniary penalty to Mr Hourigan in 12 equal monthly instalments, commencing within 14 days of the Court's order.
29. The Parties also seek an order that within three months of the date of the Court's order, the Second Respondent will undertake workplace relations compliance training (Training) on the following terms:
(a) The Training will relate to compliance with the FW Act, and must at a minimum cover employer obligation in respect of termination of employment, unfair dismissal and redundancy;
(b) The Training will be conducted by an accredited training provider or employment law specialist and will be paid for by the First Respondent or the Second Respondent;
(c) The Second Respondent will provide evidence of:
(i) The date of which the Training was completed;
(ii) The name of the person or organisation that conducted the Training; and
(ii) The training materials used and information delivered in the course of the Training; and
to the Applicant within 14 days of the Training being provided;
Submissions by the Applicant
The Applicant filed submissions in relation to penalty on 26th April 2016. They provided as follows (footnotes omitted):
1. INTRODUCTION
(1) The First Respondent did not comply with an order of the Fair Work Commission made on 22 August 2014 to pay compensation for unfair dismissal to a former employee.
(2) The Applicant filed proceedings against the First Respondent and its sole director, the Second Respondent, on 4 December 2014 alleging that the First Respondent contravened s 405 of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the order of the Fair Work Commission and the Second Respondent was accessorially liable for the First Respondent's contravention.
(3) By way of a Statement of Agreed Facts filed on 4 May 2015, the First Respondent has admitted liability to contravening s 405 of the FW Act and the Second Respondent has admitted that he was accessorially liable for the First Respondent's contravention.
(4) The Applicant now seeks the imposition of penalties under s 546 of the FW Act.
2. MATERIAL RELIED UPON
(5) The Applicant relies on the following material filed in these proceedings:
(a) Application and Statement of Claim filed on 4 December 2014;
(b) Statement of Agreed Facts filed on 4 May 2015 (SOAF);
(c) Affidavit of Vera Jonceski filed on 11 March 2016 (Inspector's Affidavit); and
(d) Affidavit of Ryan Paul Hourigan filed on 15 March 2016 (Hourigan Affidavit).
3. BACKGROUND
(6) The First Respondent operated a carpentry business, performing onsite work at building and construction sites. The Second Respondent is the sole director and company secretary of the First Respondent.
(7) From 1 February 2013 to 7 February 2014, Mr Ryan Paul Hourigan (Mr Hourigan) was employed by the First Respondent as a first year, adult, full-time carpentry apprentice.
(8) On or around 7 February 2014, the First Respondent terminated Mr Hourigan's employment,4 and Mr Hourigan's apprenticeship was cancelled.
(9) On 28 February 2014, Mr Hourigan lodged an application for unfair dismissal with the Fair Work Commission (Commission).
(10) On 23 April 2014, the Commission listed the application for the hearing of two jurisdictional objections raised by the First Respondent. Mr Hourigan appeared for himself. No one appeared for the First Respondent. The Commission relied upon the evidence of Mr Hourigan and dismissed the two jurisdictional objections.
(11) On 22 August 2014, the Commission found that Mr Hourigan had been unfairly dismissed and ordered that the First Respondent pay compensation in the amount of $7,650 to Mr Hourigan within 14 days from the date of the order (Commission Order).
(12) On 22 August 2014, the Commission notified the Applicant and the Respondents by email of the Commission Order.
(13) The First Respondent did not make any payment to Mr Hourigan within 14 days of the date of the Commission Order.
(14) On 3 October 2014, Mr Hourigan lodged a complaint with the Applicant regarding the First Respondent's failure to comply with the Commission Order.
(15) On 9 October 2014, the Applicant commenced an investigation (Investigation) into the non-compliance with the Commission Order, during which:
(a) in the period from 9 October 2014 to 29 October 2014, Fair Work Inspector Vera Jonceski (FWI Jonceski) made numerous attempts to contact the Second Respondent by telephone, mail and email;
(b) on 29 October 2014, FWI Jonceski received an email from the Second Respondent, stating in its entirety: "Due to early losses this year HW Carpentry solutions [sic] has been unable to trade since June. Regards. Heath wright [sic];
(c) on 30 October 2014, FWI Jonceski sent an email to the Second Respondent requesting, among other things, evidence to support the claim of inability to trade; and
(d) in the period from 30 October 2014 to 20 November 2014, FWI Jonceski made several attempts to contact the Second Respondent by telephone and email.
(16) The only communication from the Second Respondent to FWI Jonceski during the Investigation was the email received on 29 October 2014.
(17) On 4 December 2014, the Applicant commenced proceedings in this Court against the Respondents.
(18) On 1 June 2015, by consent the Court ordered that the matter be stayed indefinitely pending the outcome of the special leave application and/or appeal in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining & Energy Union [2015] FCAFC 59.
(19) On 9 December 2015, the High Court delivered judgment in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46.
(20) On 10 February 2016, by consent the Court made orders re-listing the matter, setting a timetable for the filing of evidence and submissions on penalty, and for the matter to be determined on the papers.
(21) On 15 April 2016, strike-off action was initiated against the First Respondent by the Australian Securities and Investments Commission (ASIC).
(22) On 18 April 2016, the Applicant formally requested that ASIC defer any deregistration of the First Respondent until the conclusion of the proceedings in this Court. As at the date of these submissions, the Applicant is waiting for a response to its request from ASIC.
(23) To date, neither the First Respondent nor the Second Respondent have made any payments to Mr Hourigan in satisfaction of the Commission Order.
4. LEGISLATIVE PROVISIONS RELATING TO PENALTY
(24) The Applicant is a statutory appointee of the Commonwealth appointed by the Governor General by written instrument under the FW Act, Part 5-2, Div 2. The Applicant is a Fair Work Inspector under s 701 of the FW Act. The Applicant has standing to bring these proceedings to apply for orders in relation to contraventions of civil remedy provisions under ss 405 and 539(2), Item 13 of the FW Act.
(25) Section 546(1) of the FW Act enables the Court to impose a penalty for contravention of a civil remedy provision.
(26) Section 546(3) of the FW Act allows the pecuniary penalty, or part of the penalty, to be paid to the Commonwealth or a particular person.
5. MAXIMUM PENALTIES
(27) Sections 539(2) and 546(2)(a) of the FW Act prescribe the maximum penalties that may be imposed by this Court for contraventions of civil penalty provisions by reference to "penalty units" within the meaning of s 4AA of the Crimes Act 1914 (Cth) (Crimes Act).
(28) Section 4AA of the Crimes Act prescribed that a penalty unit at the time the contravention occurred was $170.
(29) On that basis, the maximum penalties that may be imposed by the Court for contravening s 405 of the FW Act are:
(a) $51 ,000 on the First Respondent as a body corporate; and
(b) $10,200 on the Second Respondent.
(30) It is appropriate to consider the maximum penalties that could be imposed on the Respondents as part of the comparative exercise of assessing where the current contravention sits. The maximum penalties “do provide, taken and balanced with all of the other relevant factors, a yardstick”'.
6. FACTORS RELEVANT TO PENALTY
(31) A non-exhaustive list of factors relevant to the imposition of a penalty was summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd. Those factors include:
(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 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, taken corrective action and cooperated with the enforcement authorities;
(j) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(k) the need for specific and general deterrence.
(32) This summary was adopted by Tracey J in Kelly v Fitzpatrick. 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.
(33) The factors which the Applicant submits are material to this matter and the question of appropriate penalties are addressed in turn below.
Nature, extent and circumstances of the contravening conduct
(34) The Applicant submits that the failure to comply with the Commission Order represents a serious contravention of the FW Act, demonstrating disregard for the authority of the Commission.
(35) In Mayberry v Kijani Investments Pty Ltd, Katzmann J made the following observations regarding that respondent’s failure to comply with an order of Fair Work Australia (a predecessor of the Fair Work Commission) in contravention of s 405 of the FW Act:
The Court may make a pecuniary penalty order in addition to any other order. This is a proper case to make such an order. Employers, no less than employees, are expected to comply with the orders of Fair Work Australia. Failure to do so is liable to bring the system of regulation of industrial disputes into disrepute. Kijani’s conduct signifies a refusal to accept the umpire’s decision. It should not go unpunished.
Nature and extent of any loss or damage sustained as a result of the contravention
(36) The amount of the loss is a relatively small sum in the context of matters which come before this Court, being $7,650; however, it was nonetheless significant to Mr Hourigan. Mr Hourigan is still without the benefit of the compensation awarded to him by the Commission in August 2014.
(37) The unfair dismissal of Mr Hourigan by the First Respondent and the subsequent non-payment of the Commission Order caused him significant financial hardship. He was not able to secure a permanent job until May 2015. He needed to move back into his parents’ house and needed their assistance to pay his daily living expenses, including groceries, phone bills, petrol, electricity and training fees for TAFE. He cancelled his mobile phone for a period as he was unable to pay the phone bills and was pursued by a debt collector for an overdue personal loan.
(38) Further, there was an expectation on Mr Hourigan's part that he would complete his apprenticeship with the First Respondent and become a qualified carpenter. Mr Hourigan was unable to obtain any further employment as an apprentice carpenter, did not complete his apprenticeship, and now works as a maintenance worker with his current employer.
(39) The Applicant contends that the Court should also consider loss and damage in view of the relevant statutory objective of the FW Act. The Respondents' conduct “undermines the utility and effectiveness of a fundamental object”.
(40) One of the principal objects of the FW Act includes enabling fairness by protecting against unfair treatment, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms. Where those mechanisms are ignored, the effective operation of the Fair Work regime is undermined. It is submitted that the Respondents should be penalised accordingly.
Similar previous conduct
(41) The Respondents have not previously been the subject of proceedings by the Applicant or its predecessors for contraventions of workplace laws.
(42) Nevertheless, the conduct of the Respondents is still a “very serious matter” which the Court should take into account.
Size of the business
(43) First, the Courts have previously found that sanctions should be imposed on a meaningful level regardless of the employer's size. In Kelly v Fitzpatrick, Tracey J stated:
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": see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 at [13].
Therefore, even though the First Respondent is a small business, that is no excuse for not complying with the Commission Order.
(44) Secondly, financial difficulty does not prima facie excuse or sanction contravening conduct. In Workplace Ombudsman v Saya Cleaning Pty Ltd, Simpson FM (as he then was) stated:
In Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at paras 27 to 29 it was said:
"Employers must not be left under the impression that because of their size of financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to a Court's consideration of penalty.
Notwithstanding financial hardship that an employer may be experiencing, in Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; (1984) 3 FCR 503, 508, Keely J said:
"In this connection it is important that the respondent - and other employers bound by the award or by other awards under the Act - understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligation to comply with particular provisions of the award or the award generally should only be taken after careful consideration. They must not be left under the impression that in times of financial difficulty they can breach an award made under the Act either with impunity or in the belief that no substantial penalty will be imposed in respect of a breach found by a court to have been committed. "
Even though Simpson FM was referring to the breach of an award made under the Workplace Relations Act 1996 (Cth), in substance the principle stands that if a business is in financial difficulty this does not excuse or sanction contravening workplace laws.
(45) The Second Respondent's evidence is that the First Respondent was:
(a) insolvent before being notified of the Commission Order;
(b) unable to be placed into voluntary administration or liquidation due to insufficient assets and funds and the inability of the Second Respondent to provide a personal indemnity; and
(c) likely to be subject to a winding up order by Allianz Insurance Australia Limited.
By reason of paragraphs 43 to 45 above, the Applicant submits that the Respondents' financial difficulties are not a relevant consideration or, at best, are of limited utility and if taken into account should be considered with caution.
(47) Notwithstanding that financial difficulty is no excuse to not comply with the Commission Order, there is evidence contrary to the Second Respondent's position which suggests that the Respondents were, and are, in a position to pay at least some if not all of the relatively small amount of $7,650 required by the Commission Order, namely:
(a) evidence from the Second Respondent that $11 ,967.83 was transferred from the First Respondent's operating account to the Second Respondent's personal account on 25 August 2014,39 three days after the Commission Order was made and given to Mr Hourigan and the Respondents on 22 August 2014;
(b) evidence from both Mr Hourigan and the Second Respondent's brother that the Respondents were still operating in the period after the Commission Order was made;
(c) the Second Respondent is currently employed as a foreman in a construction company and therefore earning income;
(d) the First Respondent did not become subject to a winding up order; and
(e) the First Respondent was not placed into administration.
While this matter is to be decided on the papers and therefore evidence will not be subject to cross-examination, the Applicant submits that there are potentially serious inferences that can be drawn from the Second Respondent's conduct indicated at [13] of the 1st Wright Affidavit.
Deliberateness
(48) On 11 April 2014, an email from the Second Respondent to the Commission stated, in its entirety: "good morning apologies for any confusion just confirming that i do not intend on participating as there are no grounds to any of the applicants [sic] claims regards heath wright".
(49) The Commission Order was given to the Respondents on 22 August 2014, and the Respondents did not comply with the order.
(49) As noted at paragraph 47(a), the Second Respondent transferred money from the First Respondent's operating account to the Second Respondent's personal account after the Commission Order was made.
(50) In these circumstances, the Applicant submits that the Court draw an inference that the conduct of the Respondents demonstrates a deliberate decision not to comply with the Commission Order.
Involvement of senior management
(50) The Second Respondent is the sole director of the First Respondent. The Respondents have admitted that the Second Respondent:
(a) was the controlling mind of the First Respondent;
(b) acted on the First Respondent's behalf in all dealings with the Commission; and
(c) was accessorially liable for the contravention of s 405 and therefore, by reason of s 550(1) of the FW Act, taken to have contravened s 405 of the FW Act. 48
Contrition and corrective action
(51) To date, the Respondents have not expressed any contrition for their conduct to Mr Hourigan, the Court or the Applicant. There is no apology or remorse in the evidence of the Second Respondent.
(52) Further, the Respondents have not paid anything to Mr Hourigan since the Commission Order was made on 22 August 2014. The comment of Jarrett Jin Fair Work Ombudsman v Extrados Solutions Pty Ltd is particularly pertinent: “One would have thought that if there was an ounce of contrition from the first respondent or the second respondent, something would have been paid. “
Cooperation with enforcement authorities
(53) The Respondents did not appear at the two hearings listed before the Commission on 23 April 2014 and 28 July 2014.
(54) The only communication from the Second Respondent to the Applicant during the Investigation was the email sent to FWI Jonceski on 29 October 2014, notwithstanding multiple attempts by FWI Jonceski to make contact with the Second Respondent.
(55) The Applicant has allowed a 10% discount to take into account the Respondents’ cooperation in coming to an agreed position on penalty and entering into a Statement of Agreed Facts.
Compliance with minimum standards
(56) The Applicant submits that ensuring compliance with minimum standards is an important consideration in this case. As already stated, one of the objects of the FW Act includes enabling fairness by protecting against unfair treatment and providing accessible and effective procedures to resolve grievances and disputes.
Contraventions of orders made by statutory bodies vested with the authority to make such orders undermines the workplace relations regime as a whole and displays a disregard for statutory obligations.
(57) The Applicant submits that the Court should "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".
(58) In Meadley v Sort Worx Pty Ltd, 57 Tracey J noted that:
The Commission is charged with the responsibility of ensuring that employees are accorded the protection from proscribed adverse action to which they are entitled under the Act. When the Commission finds that an employee has been unfairly dismissed and makes remedial orders those orders must be complied with unless a stay is granted pending appeal. An employer is not entitled unilaterally to determine to ignore an order made by the Commission.
(59) The Applicant submits that penalties should be imposed at a meaningful level to ensure compliance with these minimum standards.
General and specific deterrence
(60) It is well-established that the need for general and specific deterrence is a factor relevant to the imposition of penalties under the FW Act.
(61) As Lander J said in Ponzio v B & P Caelli Constructions Pty Ltd:
... The 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 reoffending. 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 .. .In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
(62) The Applicant submits that there is a need for a significant measure of general deterrence so that others understand the need to accept the umpire's decision and comply with orders of the Commission.
(63) In particular, the Applicant also submits that there is a need for general deterrence in the apprenticeship sector and the building and construction industry; for example, 37.41 % of all complaints lodged by apprentices with the Applicant in the period 1 July 2013 to May 2014 were from the building and construction industry, representing the highest number of complaints in the apprenticeship sector.
(64) Further, over 10% of the total 18,468 complaints received by the Applicant for the 2014-15 financial year were from the building and construction industry.
(65) There is also a need for specific deterrence given:
(a) the admitted involvement of the Second Respondent in what can only be described as the deliberate conduct by the First Respondent in not complying with the Commission Order;
(b) the lack of cooperation and communication from the Respondents during the course of the Investigation, although noting there has been cooperation in reaching an agreed position on penalty;
(c) the absence of contrition or remorse; and
(d) the need to ensure this kind of conduct does not occur again.
Totality
A. Having fixed an appropriate penalty for the contravening conduct, the Court should take a final look at the penalty to determine whether it is an appropriate response to the conduct which led to the breaches and is not oppressive or crushing. The Court should apply an “instinctive synthesis” in making this assessment. This is known as the “totality principle.”
7. SUBMISSIONS ON PENALTY RANGE
B. Following the decision of Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, it was not appropriate for parties in civil penalty proceedings to make submissions identifying or recommending a range or specific amount of penalties, in light of the decision in Barbaro v The Queen [2014] HCA 2 (Barbaro).
C. However, in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate, the High Court unanimously held that the principle in Barbaro does not apply to civil penalty proceedings. It is therefore open to parties in civil penalty proceedings to make submissions on appropriate penalties to be imposed by the Court, and to reach agreed positions as to penalties.
D. Therefore, the Applicant and the Respondents have agreed to recommend to the Court that it impose penalties in accordance with paragraph 27 of the SOAF and in the range of:
(a) $32, 130 for the First Respondent; and
(b) $6,426 for the Second Respondent.
8. COURT'S POWER TO MAKE THE ORDERS SOUGHT
Court's powers
E. Under s 545(1) of the FW Act, the Court may make any order it considers appropriate if it is satisfied that a person has contravened a civil remedy provision. The orders that the Court may make include:
(c) declarations under s 16 of the Federal Circuit Court Act 1999 (Cth) (FCC Act);
(d) pecuniary penalties under s 546 of the FW Act; ·
(e) an order awarding compensation for loss that a person has suffered because of a contravention of the FW Act under s 545(2) of the FW Act;
(f) an order for an amount of interest in relation to an amount that a person was required to pay under the FW Act under s 547(2) of the FW Act and s 76 of the FCC Act; and
(g) an order for an employer to pay the pecuniary penalty to the Commonwealth or a particular person under s 546(3) of the FW Act.
Declarations
F. The Court has a wide discretionary power to make declarations.. The declarations sought by the Applicant and the Respondents have been framed to identify the contravening conduct accurately and concisely.
g. It is submitted that there will be utility in making the declaration sought by the Applicant because it clearly identifies the contravening conduct. Making the declarations sought would also mark the Court’s disapproval of the contravening conduct.
9. RELIEF SOUGHT
H. The Applicant and the Respondents have agreed to recommend to the Court that it makes the orders as set out in paragraph 29 of the SOAF.
Submissions by the Respondent
The Respondents filed their submissions on 23rd May 2016. Those submissions were as follows:
1. INTRODUCTION
1.1 On 4 December 2014 the Applicant filed proceedings against the Respondents alleging a contravention of s 405 of the Fair Work Act 2009 (Cth) (FW Act).
1.2 On 4 May 2015 the parties filed a Statement of Agreed Facts. Through this Statement of Agreed Facts, the First Respondent has admitted liability to contravening s 405 of the FW Act and the Second Respondent has admitted that he was accessorily liable for the First Respondent.
1. MATERIAL RELIED UPON
1.3 The Respondent relies on the following material filed in these proceedings:
a. Statement of Agreed Facts filed on 4 May 2015 (SOAF);
b. The first affidavit of Heath Patrick Wright sworn on 10 March 2015 (First Affidavit);
c. The second affidavit of Heath Patrick Wright filed on 18 February 2016 (Second Affidavit)
2. BACKGROUND
2.1 The First Respondent is an incorporated entity which operated a carpentry business from 1 February 2013 onwards.
2.2 The Second Respondent is the sole director and company secretary of the First Respondent.
2.3 The Second Respondent had no previous experience as a director of a company or as a company secretary.
2.4 The First and Second Respondent had no previous experience in employment disputes.
2.5 The First Respondent was incorporated to provide employment for three employees Ryan Hourigan (Mr. Hourigan), Toby Wright and the Second Respondent.
2.6 Mr. Hourigan was employed by the First Respondent in the period of 1 February 2013 to 7 February 2014, as a first year, adult, full -time carpentry apprentice.
2.7 On or about 7 February 2014, the First Respondent terminated Mr. Hourigan's employment.
2.8 On 28 February 2014, Mr. Hourigan lodged an application for unfair dismissal with the Fair Work Commission (Commission).
2.9 On 23 April 2014, the Commission listed the application for hearing. Mr. Hourigan appeared for himself. The Respondents did not appear.
2.10 On 31July2014, the First Respondent ceased trading due to its insolvent position.
2.11 On 22 August 2014, the Commission found that Mr. Hourigan had been unfairly dismissed and ordered that the First Respondent pay compensation in the amount of $7,650 to Mr. Hourigan within 14 days from the date of the order (Commissions Order).
2.12 On 24 August 2014 the Second Respondent transferred into his personal bank account, $11,967.83 as a loan repayment between the First Respondent to the Second Respondent.
2.13 On 28 August 2014, the Respondents were notified by registered mail of the judgment entered in favor of Mr. Hourigan (Notification Date).
2.14 From the Notification Date, the Second Respondent borrowed $7,612.77 from the First Respondent, which was later exhausted on ongoing works.
2.15 At the Notification Date, the First Respondent had the following debts:
(a) A debt to Allianz Australia Insurance Limited in the value of $4,591 .22.
(b) Debts relating to a failure by the First Respondent to pay PAYG and superannuation contributions in the period of the 2013/2014 financial year, amounting to $22,285.
(c) Debts stemming from unpaid GST liability for the First Respondent amounting to approximately $12,000.
2.16 Due to these debts, the Respondents submit that the First Respondent was insolvent on or before the Notification Date in the value exceeding $45,000 in secured creditors.
2.17 The First Respondent has not traded since 31 July 2014.
2.18 The First Respondent has not been placed into voluntary administration/liquidation and has not become the subject of a winding up order by Alliance Australia Insurance Limited.
2.19 In the period from 1 July 2012 onwards, the Second Respondent has earned a personal yearly income of $40,000 on average.
2.20 The Second Respondent has approximately $5,077 .20 in savings.
2.21 The Second Respondent has approximately $11,000 in a superannuation account with Australian Super.
2.22 The Second Respondent has no other significant assets of any realizable value.
3. LEGISLATIVE PROVISIONS
3.1 Section 546(1) of the FW Act enables the Court to impose a penalty for the contravention of a civil remedy provision.
3.2 Section 546(3) of the FW Act allows the pecuniary penalty, or part of the penalty to be paid to the Commonwealth or a particular person.
4. SUBMISSIONS ON PENALTY RANGE
4.1 In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, the High Court unanimously held that the principle in Barbaro v The Queen [2014] HCA 2 does not apply to civil penalty proceedings.
4.2 It is therefore open to parties in civil penalty proceedings to make submissions on appropriate penalties to be imposed by the Court, and to reach agreed positions as to penalties.
4.3 Therefore, the Respondents and the Applicant have agreed to recommend to the Court that it impose penalties in accordance with paragraph 27 of the SOAF and in the range of:
(a) $32, 130 for the First Respondent; and
(b) $6,426 for the Second Respondent.
5. COURT'S POWER TO MAKE THE ORDERS SOUGHT
5.1 Under s 545(1) of the FW Act the Court may make any order it considers appropriate if it is satisfied that a person has contravened a civil remedy position.
6. ORDERS SOUGHT
6.1 The Respondent and the Applicants have agreed to recommend to the Court that it makes the orders as set out in paragraph 29 of the SOAF. This paragraph states:
“The Parties have agreed to recommend to the Court that it make the following orders:
(a) An order pursuant to section 545(2(b) of the FW Act that the First Respondent pay compensation to Mr. Hourigan in the amount of $7,650 within 14 days of the date of the order;
(b) An order pursuant to section 547(2) of the FW Act that the First Respondent pay interest to Mr. Hourigan at the applicable pre-judgement rate on the amount referred to in paragraph 28(b) above within 14 days of the date of the order;
(c) An order pursuant to subsection 546(1) of the FW Act imposing a pecuniary penalty on the First and Second Respondent for the Admitted Contraventions;
(d) An order pursuant to subsection 546(3)(a) of the FW Act that the First Respondent pay its penalty to the Commonwealth within 28 days of the Court's order.
(e) An order pursuant to subsection 546(3)(c) of the FW Act that the Second respondent pay its pecuniary penalty to Mr. Hourigan in 12 equal monthly installments, commencing within 14 days of the Court's order.”
Consideration & Disposition
Before considering in detail principle and agreed facts regarding the determination of penalty, it is appropriate to note the following comments by the High Court regarding the determination and imposition of civil penalties in Commonwealth v Director, Fair Work.
At [25] – [32], the plurality (French CJ, Kiefel, Bell, Nettle and Gordon JJ) said (Gageler J and Keane J generally agreeing in separate reasons, at [68] and [79] respectively; internal citations omitted):
[25] Until the Full Court's decision in this matter, the practice followed in relation to civil penalty proceedings generally accorded with the decisions of the Full Court (Burchett, Carr and Kiefel JJ) in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [19] and the Full Court (Branson, Sackville and Gyles JJ) in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd[20] (“Mobil Oil”).
[26] NW Frozen Foods was concerned with a civil penalty proceeding brought by the Australian Competition and Consumer Commission (“the ACCC”) under s 76 of the Trade Practices Act. As already noted, s 76 provided that, if the court were satisfied that a person had contravened or attempted to contravene a provision in Pt IV of the Act, the court could order the person to pay the Commonwealth a pecuniary penalty not exceeding a specified sum that the court determined to be appropriate having regard to all relevant matters. The provision thus placed responsibility on the shoulders of the court to determine the penalty, having regard to all relevant matters.
[27] The Full Court observed that, because the effects of a contravention on the functioning of markets and other economic consequences were likely to be among the most significant relevant considerations in the determination of penalty, the court would be assisted by the views of the ACCC. Hence, as had earlier been accepted by Sheppard J in Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4 (“Allied Mills”), the Full Court held that it was not inappropriate for the parties to present the facts and analysis of market effects in the form of agreed statements and for the ACCC and the contravener to make joint submissions as to the appropriate level of penalty.
[28] The Full Court further observed that, given the public interest in promoting the negotiated resolution of civil penalty proceedings, and that the fixing of the quantum of penalty is not an exact science, the task of a court in setting a pecuniary penalty was not necessarily to ask itself whether it would independently have come to the precise quantum proposed by the parties. Rather, the court should determine whether the parties' proposal could be accepted as fixing an appropriate penalty. Burchett and Kiefel JJ explained the reasons for that as follows :
“There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case."
[29] Thereafter, the approach thus sanctioned in NW Frozen Foods was routinely followed until the matter was revisited by the Full Court in Mobil Oil.
[30] As appears from the latter decision, the need for reconsideration of the issue arose from obiter reservations expressed by Finkelstein J and Weinberg J in decisions at first instance. In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (“ABB Transmission”), Finkelstein J had observed that consent might be coerced and therefore that the absence of a trial might lead to injustice. He had also posited that, because most matters were resolved without a full hearing on the merits, it was becoming more difficult for a court to determine whether an agreed penalty was appropriate. In Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (“Colgate”), Weinberg J had stated that agreed submissions as to a specific penalty figure were, in his view, undesirable because he found it difficult to conceive of parties proposing a pecuniary penalty so much beyond the permissible range of penalties that a court would depart from the proposed penalty submission and, hence, that there was a danger of the court being seen to “rubber stamp” decisions taken by the body charged with investigating and prosecuting contraventions. Weinberg J had also suggested that it would be preferable for parties to submit a range of penalties instead of an agreed figure.
[31] In Mobil Oil, the Full Court rejected those concerns as unfounded. Taking them in turn, their Honours observed that when and if a poorly resourced respondent were party to a joint penalty submission, the court should scrutinise the submission and supporting statement of facts with particular care to ensure, so far as possible, that the statement of facts was accurate and the contravener's will had not been overborne. In reality, there was no particular shortage of reported cases in which the question of penalties had been fully agitated in a contested hearing. In any event, each case depended on its own merits and, as NW Frozen Foods demonstrated, if a judge considered that previous cases provided insufficient guidance for the case to be determined, he or she was free to act on that view. Contrary to the supposed improbability of a judge departing from an agreed penalty submission, Wilcox J had only recently done just that in Australian Competition and Consumer Commission v FFE Building Services Ltd: in effect rejecting an agreed penalty submission of $1.5 million and imposing in its place a penalty of more than twice that amount. Contrary, moreover, to the supposed danger of the court being perceived as a “rubber stamp” for agreed penalty submissions, NW Frozen Foods required the court always to form its own view about the appropriate range of penalties. Finally, there would be little advantage in limiting parties to an agreed range as opposed to an agreed figure. A better way of reinforcing the court's responsibility to determine an appropriate penalty was for the court to scrutinise the material presented to it carefully and satisfy itself that it was sufficient to determine whether the agreed penalty was appropriate.
[32] By way of explication, the Full Court added five observations, in substance as follows:
(1) As noted in Allied Mills and NW Frozen Foods, the rationale for giving weight to a joint submission on penalty rests on the saving in resources for the regulator and the court, the likelihood that a negotiated resolution will include measures designed to promote competition and the ability of the regulator to use the savings to increase the likelihood of other contraveners being detected and brought before the courts.
(2) NW Frozen Foods does not mean that a court must commence its reasoning with the penalty proposed by the parties and then limit itself to a consideration of whether the penalty proposed is within the range of permissible penalties. That is one option, but another is to begin with an independent assessment of the appropriate range of penalties and then compare it with the proposed penalty.
(3) The decision in NW Frozen Foods represented a correct application of the approach enunciated by Sheppard J in Allied Mills [37]. As Sheppard J stated, the court is not bound by the figure suggested by the parties. Rather, the court has to satisfy itself that the submitted penalty is appropriate while acknowledging that, uninformed by the agreed penalty submission, the court might have selected a slightly different figure [38]. That approach is correct in principle and it has been cited with approval by the High Court of New Zealand in Commerce Commission v New Zealand Milk Corporation Ltd [39].
(4) The decision in NW Frozen Foods is consistent with the imperative recognised in Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [40] that the regulator should explain to the court the process of reasoning that justifies a discounted penalty.
(5) The decision in NW Frozen Foods allows for the following possibilities:
(a) if the court is not satisfied that the evidence or information offered in support of an agreed penalty submission is adequate, it may require the provision of additional evidence, information or verification and, if that is not forthcoming, may decline to accept the agreed penalty;
(b) if the absence of a contradictor inhibits the court in the performance of its task of imposing an appropriate penalty, the court may seek the assistance of an amicus curiae or an individual or body prepared to act as an intervener;
(c) if the court is not prepared to impose the penalty proposed by the parties, it may be appropriate to allow the parties to withdraw their consent and for the matter to proceed on a contested basis.
The High Court ultimately rejected the application of Barbaro v R to civil penalty proceedings, the plurality reasoning at [53] - [55] and [58] - [64] (emphasis added):
[53] Civil penalty proceedings are civil proceedings and therefore an adversarial contest in which the issues and scope of possible relief are largely framed and limited as the parties may choose, the standard of proof is upon the balance of probabilities and the respondent is denied most of the procedural protections of an accused in criminal proceedings.
[54] Granted, both kinds of proceeding are or may be instituted by an agent of the state in order to establish a contravention of the general law and in order to obtain the imposition of an appropriate penalty. But a criminal prosecution is aimed at securing, and may result in, a criminal conviction. By contrast, a civil penalty proceeding is precisely calculated to avoid the notion of criminality as such.
[55] No less importantly, whereas criminal penalties import notions of retribution[74] and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 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."
…
[58] Possibly, there are exceptions to the general rule. There is, however, no reason in principle or practice why civil penalty proceedings should be treated as an exception. Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant's compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement.
[59] It is true that there is a public interest in the imposition of civil penalties as opposed to the purely private interests which are in issue in many civil proceedings. But civil penalty proceedings are by no means the only civil proceedings in which the public interest is involved. Custody disputes involve the public interest. So do group proceedings and schemes of arrangement. So also do taxation, customs and social security appeals, and detention orders; and examples can be multiplied. Yet in each of those cases, it is wholly unexceptionable for a court to accept an agreed submission as to the nature and quantum of relief, provided the court is persuaded that it is an appropriate remedy. Once it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate.
[60] It is also true, as the Full Court observed, that the regulator in a civil penalty proceeding is not disinterested. As has been seen, under the BCII Act, the Director's statutory functions include monitoring and promoting appropriate standards of conduct by building industry participants generally. It is, therefore, naturally to be assumed that the Director will fashion penalty submissions with an overall view to achieving that objective and thus perhaps, if not probably, with one eye to considerations beyond the case in hand. That consideration, however, supports, rather than detracts from, the propriety of a court receiving joint (or separate) submissions as to facts and penalty and imposing the proposed penalty if persuaded that it is appropriate. As was emphasised in NW Frozen Foods, it is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance.
[61] That being said, the submissions of a regulator will be considered on their merits in the same way as the submissions of a respondent and subject to being supported by findings of fact based upon evidence, agreement or concession. As was also said in NW Frozen Foods:
“Courts have learned to be suspicious of claims of secret knowledge; and justice should be done in the light, with the relevant facts exposed to view. It is the Court which bears the responsibility."
But, subject to that imperative, there is no indication in the purpose or text of the BCII Act that the court should be less willing to receive a submission as to the terms and quantum of penalty in a civil penalty proceeding than to receive a submission as to the terms and quantum of relief put up for approval by the court in any other kind of civil proceeding.
[62] The BCII Act expressly provides that the Director's functions include intervening in proceedings and making submissions in accordance with the Act and it does not impose any express limitation or restriction on the evidence, materials or submissions which may be received from the Director. By providing for civil penalty proceedings, it implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure.
[63] That impression is fortified by the provision made in s 49 of the BCII Act for civil penalty proceedings to be instituted by a range of eligible persons, including persons who are affected by a putative contravention, and for a range of remedies, including an order requiring the defendant to pay a specified amount by way of compensation for damage suffered by another person as a result of the contravention. There can be no question that a person affected by a contravention who brought a civil penalty proceeding under s 49 would be entitled to make submissions to the court as to the terms and quantum of the relief sought, just as there can be no question that the respondent to such a proceeding would be entitled to make submissions as to the terms and quantum of any relief to be granted. And the legislation draws no distinction between the procedure applicable to such a proceeding and the procedure which is to apply to a proceeding instituted by the Director. Rather, by conditioning the court's power to make a civil penalty order on application by an eligible person in a civil proceeding, s 49 appears to contemplate that whoever be the eligible person will identify the relief which is sought, not only in the initiating process but also in final address.
[64] The Full Court considered it to be significant that the BCII Act did not expressly provide for the Director to make submissions as to penalty. But the absence of any express provision of that kind is unremarkable. It is to be presumed that Parliament intended that the civil penalty provisions of the BCII Act would be applied in accordance with the long-established “general system of law". There is nothing in the BCII Act which necessarily implies the exclusion of the prima facie entitlement of the Director as a party to a civil penalty proceeding to make submissions as to the form and quantum of the relief which is sought and, contrary to the Full Court's reasoning, the phenomenon of a regulator making submissions as to the terms and quantum of a civil penalty does not lead to and is not likely to lead to erroneous views about the importance of the regulator's opinion in the setting of appropriate penalties. In contradistinction to the role of the Crown in criminal proceedings, it is consistent with the purposes of civil penalty regimes of which Pt 1 of Ch 7 of the BCII Act is typical, and therefore with the public interest, that the regulator take an active role in attempting to achieve the penalty which the regulator considers to be appropriate and thus that the regulator's submissions as to the terms and quantum of a civil penalty be treated as a relevant consideration.
In the light of the High Court’s comments just noted, for current purposes, it is sufficient to highlight and have regard to relevant principle drawn primarily from the following: Kelly v Fitzpatrick, Australian Ophthalmic Supplies Limited v McAlary-Smith (“McAlary-Smith”), and the relatively recent decision of Bromberg J in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (“ABCC”).[3]
[3] Kelly v Fitzpatrick (2007) 166 IR 14; Australian Ophthalmic Supplies Limited v McAlary-Smith (2008) 165 FCR 560; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2012] FCA 189.
As noted in the submissions filed on behalf of the Applicant, in Kelly v Fitzpatrick, at [14], Tracey J outlined a range of “non-exhaustive” considerations in relation to penalty. They are:
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 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.
In McAlary-Smith, among many matters addressed in the instructive judgments of each member of the Full Court, Buchanan J cautioned, at [21], against using any single list of considerations in a prescriptive or restrictive manner.[4]
[4] See, for example, the following matters addressed by the members of the Full Court in McAlary-Smith regarding considerations in relation to the determination of penalty: 165 FCR at [23] (Gray J), [53] – [56] and [71] (Graham J), and [87] – [90] and [102] (Buchanan J).
In ABCC, Bromberg J said, admittedly in a slightly different legislative context, at [19] – [23] (emphasis added):
[19] The relevant considerations required for an assessment of the appropriate penalty to be imposed for a breach of the BCII Act have been discussed at length by this Court: see Stuart- Mahoney v CFMEU [2008] FCA 1426 at [40] (Tracey J); Temple v Powell [2008] FCA 714; (2008) 169 FCR 169 at [56]- [78] (Dowsett J); Cahill v CFMEU (No 4) [2009] FCA 1040 at [9]- [10] (Kenny J).
[20] As the parties have proposed an agreed penalty to be imposed in these proceedings, the relevant question for the Court is whether that agreed penalty is “appropriate in all the circumstances”: Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] (Branson, Sackville and Gyles JJ) where the Full Court adopted the reasoning of Burchett and Kiefel JJ (with whom Carr J agreed) in NW Frozen Foods Pty Ltd v ACCC [1996] FCA 113; (1996) 71 FCR 285 at 298-299.
[21] In Mobil at [51], the Full Court listed the principles enunciated in NW Frozen Foods including that:
· it is the Court’s responsibility to determine the appropriate penalty ;
· determining the quantum of a penalty is not an exact science;
· there is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;
· the view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty ;
· 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 in the circumstances of the case;
· 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; and
· it will be appropriate if within the ‘permissible range’.
[22] The ‘permissible range’ of penalties refers to that range that would be permitted by the Court, which is neither manifestly inadequate nor manifestly excessive, and only where the agreed penalty falls outside the permissible range should the court depart from the figure agreed by the parties: see Wells v Locano Management Pty Ltd [2008] FCA 1034 at [23] (Jessup J); Ponzio v B & P Caelli Constructions [2007] FCAFC 65; (2007) 158 FCR 543 at [129] (Jessup J) and Alfred v CFMEU [2011] FCA 556 at [68] (Tracey J).
[23] The CFMEU contended, and I agree, that the following principles should also inform the exercise of the Court’s discretion:
(a) Proportionality: that any penalty imposed should not exceed that which is appropriate or proportionate to the gravity of the contravention found proven in the light of its objective circumstances: Hoare v the Queen [1989] HCA 33; (1989) 167 CLR 348 at 354 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ). See also the Veen v The Queen (No 1) [1979] HCA 7; (1979) 143 CLR 458 at 467-468 (Stephen J) and 482-483 (Jacobs J) and 495 (Murphy J); Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 472 (Mason CJ, Brennan, Dawson and Toohey JJ), 485-486 (Wilson J), 490-491(Deane J) and 496 (Gaudron J). This approach has been adopted in relation to contraventions of the BCII Act: Stuart v CFMEU [2010] FCAFC 65; (2010) 185 FCR 308 at [30] (Moore J).
(b) Parsimony: the Court must ensure that it imposes the minimum term consistent with the attainment of the relevant purposes of sentences taking care that the punishment is only for the crimes before the Court: R v Valentini [1980] FCA 133; (1980) 48 FLR 416 at 420 (Bowen CJ, Muirhead and Evatt JJ).
(c) Penalty maximum: that the maximum penalty should be reserved for the worst type of contravention: Veen v The Queen (No 2) at 478 (Mason CJ, Brennan, Dawson and Toohey JJ); Stuart v CFMEU at [30] (Moore J).
By way of general summary, I need only note the following brief comments from the joint judgment of Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission. Their Honours said (at pp.294G-295A-C; internal citations omitted):[5]
The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance programme for the future.
A hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties… There should not be such an inequality as would suggest that the treatment meted out has not been even-handed…
Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case…
[5] Similar comments were made by the Full Court in Ponzio v B & P Caelli Constructions Pty Limited (2007) 158 FCR 543 at [93] (Lander J).
In my view, in the light of the High Court’s comments in Commonwealth v Director, Fair Work, the parties (through their legal representatives) (a) have properly set out and considered the Statement of Agreed Facts, (b) equally appropriately set out and considered the relevant statutory provisions and authorities (in particular the Full Court decision in McAlary-Smith, and the judgment of Tracey J in Kelly v Fitzpatrick, among others), and accordingly (c) have recommended to the Court Declarations and Orders (including penalties) that are appropriate in all the circumstances. In my view it would serve no useful purpose to repeat matters set out in the submissions with which I agree, particularly the comprehensive submissions on behalf of the Applicant. Put another way: I accept and adopt in their entirety the submissions filed on behalf of the Applicant; I also accept the submissions on behalf of the Respondents.
In my view, the penalty proposed is proportionate to the facts and circumstances of the contraventions alleged and to which the Respondents have admitted their liability. And as such, the penalty also reflects, in my view, the proper and expeditious resolution of the proceeding, thereby saving valuable public resources.
Declarations and Orders should be made as proposed by the Applicant, and which (as noted) are supported by the Respondents.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 21 December 2016
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