Industrial Relations Secretary v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (No 2)

[2017] NSWSC 430

Supreme Court

New South Wales

Medium Neutral Citation:	Industrial Relations Secretary v Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales (No 2) [2017] NSWSC 430
Hearing dates:	10 April 2017
Date of orders:	12 April 2017
Decision date:	12 April 2017
Jurisdiction:	Common Law - Administrative Law
Before:	Fagan J
Decision:	For the contravention of the orders of the Industrial Relations Commission, as found by order of this Court on 9 February 2017, the defendant is ordered to pay a fine of $84,000.
Catchwords:	INDUSTRIAL LAW – s 139 Industrial Relations Act 1996 (NSW) – breach of dispute orders over numerous days – a determination of penalty – whether infringement of ancillary dispute orders over numerous days punishable as multiple contraventions – factors relevant to assessment of penalty
Legislation Cited:	Industrial Relations Act 1996 (NSW)
Cases Cited:	Australian Workers' Union (NSW) v BlueScope Steel (AIS) Pty Limited [2006] NSWIRComm 71; (2006) 151 IR 153 Industrial Relations Secretary v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales [2017] NSWSC 71 Secretary to the Treasury v Public Service Association (No. 2) [2013] NSWIRComm 25
Category:	Consequential orders (other than Costs)
Parties:	Industrial Relations Secretary (prosecutor) Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales (defendant)
Representation:	Counsel: Mr Robert Ranken (prosecutor) Mr Mark Gibian (defendant)   Solicitors: Ms Lucy Boyle (prosecutor) Ms Alison McRobert (defendant)
File Number(s):	2017/0380812017/040552
Publication restriction:	Nil

Judgment

1. In these proceedings the Court declared on 9 February 2017 that the defendant (“the Association”) had contravened orders made on 2 February 2017 by Commissioner Newall in the Industrial Relations Commission. The Court's reasons for the making of that declaration were published as Industrial Relations Secretary v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales [2017] NSWSC 71 (“the previous decision”). On 10 April 2017, evidence was heard and submissions received from the prosecutor and the Association relevant to the appropriate penalty to be imposed under s 139 of the Industrial Relations Act 1996 (NSW). These are the Court's reasons for its decision on the penalty. These reasons should be read with the previous decision.

2. The previous decision at [4] to [14] recounts the circumstances in which a dispute arose between the prosecutor as employer and the Association as the employees' union. Commissioner Newall's orders of 2 February 2017 are set out in full in the previous decision at [19]. The facts of the contravention of the orders are set out at [20] to [29]. Stated as briefly as possible, the Commissioner ordered

1. by order A1, that the Association and:

its officers, employees and members employed [by the Prosecutor] immediately cease and refrain from taking any form of industrial action in the area of Disability Services operated by the Department of Family and Community Services.

2. and by order A2, that:

the Association and its officers, employees and agents not induce, advise, authorise, encourage, direct, aid or abet members to organise or take further industrial action in the area of Disability Services operated by the Department of Family and Community Services.

Maximum penalty for a single contravention over multiple days

3. Section 139 of the Industrial Relations Act provides for a maximum penalty which may be imposed on an industrial organisation for a contravention of an order such as either of those made by Commissioner Newall. In the circumstances of the present case, where the Association has previously incurred a penalty for such a contravention, the maximum is:

“…$20,000 for the first day the contravention occurs and an additional $10,000 for each subsequent day on which the contravention continues.”

4. It is apparent that contravening conduct which continues from day-to-day is not to be regarded as a series of contraventions, at least not where the contravention in question is committed by conduct of an homogenous kind. Here the contravention commenced on 2 February 2017 by the Association maintaining on its website a notice directing members to strike for 24 hours from the commencement of the day shift on 14 February 2017. The day shift for the relevant employees commenced at 7:00 am. The direction to strike was, therefore, given in respect of most of 14 February 2017 and part of 15 February 2017.

5. At [20] of the previous decision I recorded a finding that the contravention had continued up to 9 February 2017, the date of that judgment. Evidence led in the penalty hearing on 10 April 2017, has established that the notice continued to be displayed by the Association on its website up to and including 15 February 2017, thus a total of 14 days. I also found that a second notice informing members that the strike would proceed was displayed on and from 3 February 2017: [21] to [24] of the previous decision. I did not find this to be a second or different contravention but a second particular or aspect of the contravention of Commissioner Newall's orders which had commenced with the original pre-2 February notice being left on display. The evidence in the penalty proceedings has shown that the notice which was first posted on 3 February remained exhibited up to and including 15 February 2017.

Extent of participation in the strike

6. Commissioner Newall's orders A1 and A2 are to substantially the same effect and I treat them as two limbs of what is, in substance, one composite order. Accordingly, there is only one contravention attracting a penalty under s 139, not two contraventions of two orders, respectively, attracting two penalties.

7. The Association's call to strike was heeded by some of its members. I accept the evidence of the Association's Assistant General Secretary, Mr Troy Wright, that of the approximately 2,700 to 2,800 disability care workers employed by the prosecutor to provide care in group homes, about half or approximately 1,350 to 1,400 people are members of the Association. On 14 and 15 February 2017, 427 of these were absent from work without authorisation, apparently participating in the strike.

8. The Department employs about 700 clinical staff (supervisors, case workers, psychologists and others) and about 400 to 500 administrative staff, in addition to the disability care workers. These other clinical and administrative staff are office based. The Association's coverage of staff in these categories is not the subject of evidence. A low proportion of them, only 117, participated in the strike.

Multi-day penalties are available for ongoing encouragement to strike

9. The strike continued from 7:00 am on 14 February to 7:00 am on 15 February 2017. As this was after the filing of the summons and after the Court's finding of the contravention, the plaintiff would have had to seek leave to amend its summons or file a fresh one if it wished to rely upon the strike itself as a contravention in respect of which a penalty should be imposed. No such amendment or fresh filing has been sought or effected.

10. The Association cited Australian Workers' Union (NSW) v BlueScope Steel (AIS) Pty Limited [2006] NSWIRComm 71; (2006) 151 IR 153, a case in which the Industrial Relations Commission had made an order numbered 1 which directed the Union, its officers and certain of its members to cease taking industrial action and orders numbered 2 and 3 which directed the Union and its officers to cease organising and encouraging industrial action and to take active steps to halt such action (see [11] of the judgment cited).

11. The Full Bench of the Commission in Court Session held that the making of the ancillary orders numbered 2 and 3 was within the Commission's power (at [61]) but that those orders did not “constitute separate dispute orders (for which separate penalties may be imposed in the event of breach) but remain part of the single exercise of power under s 137(1) of the Act.” It is not necessary for me to decide whether that is a decision of general application or whether it turned upon the manner in which the particular orders in that case had been drafted. As stated above, the relevant orders in the present case, identified as A1 and A2, are repetitive of each other in substantive effect and each of them combines a primary prohibition against taking industrial action with a secondary or ancillary prohibition against encouraging or organising industrial action.

12. Further, only the infringement of the ancillary prohibition is invoked by the prosecutor as a contravention in this case. Hence, consistently with what the Full Court held in Australian Workers' Union (NSW) v BlueScope Steel (AIS) Pty Limited, I proceed to determine penalty upon the basis that there has been but one contravention of the combined and common effect of orders A1 and A2; that that contravention continued over 13 days and that it exposes the Association to a maximum penalty of $150,000, being $20,000 for the first day and $10,000 for each of the ensuing 13 days.

13. The Association has submitted that although the Commissioner was empowered to order that it should refrain from bringing about strike action by its members, s 139(4) of the Industrial Relations Act does not permit a penalty to be imposed for multiple days of contravention of an ancillary order. The Association submits that multi day penalties under s 139(4) can only be imposed for multi day contraventions of what the Association terms the “primary” part of the orders, namely, the part which prohibits the strike action itself. The Association submits that this follows from the Full Court's decision, to which I have referred, at [61] to [68]. I do not agree.

14. In the Full Court decision which has been cited the prosecutor's summons was held only to contemplate “one offence for which penalties may be applied on an accumulating basis for each day of the breach.” Their Honours overturned the imposition at first instance of penalties which had included separate cumulative fines for breaches of different parts of the order on the same day. For example, a fine had been imposed for the actual conduct of the strike on a particular day, and for the failure of the Union on the same day to take reasonable steps to halt it: [25] in the Full Court's judgment.

15. I understand the Full Court to have disapproved the multiple penalties imposed at first instance in so far as:

1. they departed from the summons, which alleged only one contravention, albeit over multiple days, and

2. multiple penalty amounts were assessed for single days upon which more than one aspect of the dispute order was said to have been infringed.

16. The Full Court's disapproval of these features of the first instance decision appears from [68]. I do not understand the Full Court to have said that an infringement of an ancillary prohibition against encouraging or organising strike action could never continue over multiple days so as to expose an industrial organisation to multi-day penalties. On the contrary, their Honours said at [65]:

“We do not consider that the ancillary or facilitative orders have a different quality to the ‘cease and refrain order’, although a contravention may be established by a failure to take those steps, even if a breach of the primary obligation is not made out.”

17. Given their Honours' recognition that there may be a punishable contravention of ancillary orders even without an accompanying or ultimate breach of a primary order against the conduct of a strike, it must follow that there may be multi-day punishable contraventions of ancillary orders alone. The Association submits that this view of the Act may lead to “perverse” consequences. For example, a union would be exposed to a high maximum penalty for a long lead up of encouraging a strike, in contravention of ancillary orders, albeit that the strike itself may be brief and of minimal impact and its seriousness may be lessened by the long period of notice to the employer. On the other hand, so it is said, a lesser maximum penalty would be available for a strike over one or two days with no precursor period of encouragement or incitement in contravention of ancillary orders. It is said that the contrast in these two examples exhibits a perverse outcome in that a strike without notice may, in fact, be more damaging to the employer and have more serious consequences than a strike which followed a long period of incitement with ample notice to the employer.

18. I accept that that comparison shows a deficiency in the maximum penalty provisions but that does not indicate that the construction I place upon s 139 in its application to the present situation is incorrect. In my opinion, the construction that I have attributed to the section and the manner in which it applies to the present facts is clear.

Knowing and deliberate breach of orders

19. At [46] of the previous decision I identified some of the factors relevant to the penalty which should be fixed in this case. As to the first of those considerations, I find that the contravention in this case was in knowing and deliberate defiance of the orders. This was reflected in the Association's published statement of 3 February 2017 that it would proceed with the organisation of the strike “even if it means the Union cops a fine.”

20. The level of defiance was still greater in the continuance of the contravention from 10 to 15 February 2017 inclusive after publication of the Court's reasons for finding the contravention proved in these proceedings. At [47] to [50] of the previous judgment I made clear the Court's disapproval of the Association deliberately disregarding of the Commissioner's order. Notwithstanding that, evidence on the sentence proceedings was that after my decision had been handed down members of the controlling body of the Association voted unanimously to continue with the strike.

Previous breach of such orders by the Association

21. As to the second relevant consideration, the Association has once previously acted in contravention of a Commissioner's orders, namely, by the conduct of a state-wide stop-work meeting on 8 October 2012. Several thousand working hours were lost as a result of the stop-work. It disrupted the courts, prisons, Department of Family and Community Services, schools and the registries of Roads and Maritime Services. The details of this are recorded in Secretary to theTreasury v Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales (No. 2) [2013] NSWIRComm 25 at [19]. Boland J accepted at [31] that the stoppage “was not of the worst kind or anywhere near it”. A fine of $2,500 was imposed.

22. No doubt this was in reasonable proportion to the maximum penalty of $10,000 which was available, taking into account the level of impact of the strike and other surrounding features as compared with what might be regarded as a worst possible case. It must be said that the level of fine which was fixed in that matter, having due regard to the degree of seriousness of the contravention, mostly serves to demonstrate that the penalties prescribed in this area are inadequate to provide any significant level of general deterrence.

23. The contravention in that previous case in October 2012 occurred in the setting of a dispute about caps on pay rises and directions from the Government for the elimination of jobs in the public sector. I do not consider that that previous instance of a breach of the Commission's orders has great significance for the penalty to be imposed today. For the present case the prior infringement really has no significance other than its statutory effect of doubling the maximum which would otherwise be applicable. Neither the previous instance of breach nor any other evidence persuades me that there is an entrenched or long-standing culture of disobedience to Commission orders within the Association. It may be noted that there was an expression of regret for the breach in the 2012 case, as recorded at [52] of the judgment of Boland J on penalty.

The impact of the strike

24. The third consideration material to the level of penalty in the present case is the severity of the consequences of the contravention. The evidence shows that as a result of the strike which followed upon the encouragement which breached Commissioner Newall’s orders the Department had to cancel for three days the provision of respite care which it would normally offer. There was a consequent loss of service during that period to families and others in need of relief from the burden of daily care for disabled relatives or friends. No financial cost to the State has been shown on this account but nor is there any evidence of any saving in dollar terms to the State as a result of cancelling the respite care, such as might offset other financial consequences of the strike.

25. A significant amount of time of administrative staff within the Department of Family and Community Services was devoted to finding replacements for staff who gave notice of their intention to strike on 14 and 15 February 2017. Those administrative staff are on the State payroll in any event. There was no additional cost to the State in direct monetary terms but the consequence was the diversion of the efforts of administrative staff from their normal tasks to the unproductive function of marshalling disability care workers to fill the places of striking employees.

26. An estimate has been given of the extra cost of overtime for disability carers who worked additional hours to cover the absence of strikers. There has also been provided an estimate of the cost to the Department of engaging substitute staff through agencies and the cost of utilising casual staff. The total cost in these areas has been given in evidence at over $210,000. Against this is to be offset a saving to the State of about $135,000 being the salary or wage payments of striking workers who were not paid for their unauthorised day off.

27. There would be some additional saving, not estimated in the evidence, for office based staff who joined the strike and who therefore were not paid for the day. Their non-attendance caused loss of provision of services to clients of the Department. It does not appear that any group homes or other facilities staffed by employees in the relevant category had to be closed or that any client suffered any tangible harm. I find that that outcome was significantly contributed to by the circumstance that the Association gave the Department advance notice of the strike and instructed its members to give 7 days' notice of intention to participate. This appears to have been largely complied with.

28. I also find that the Association, through its representatives, offered on Friday, 10 February 2017, to try to assist with filling vacancies on shifts if the Department found itself critically unable to staff any shift at any particular location. I infer that if this offer had been called upon it would have been fulfilled by the Association urging one or more members not to take part in the strike if that appeared necessary. In the event this offer was not called upon by the Department as its senior personnel understandably found it more reliable and more within their control to make their own arrangements to cover staff short-falls.

General deterrence

29. A further consideration relative to the level of penalty is the need for deterrence. I regard that as of great importance. In this case, as in any case of disregard of the Commission's orders, if the Commission's authority is to be upheld then participants in the Industrial Relations system who gain the benefits of that system must face a sufficient deterrent against simply disregarding orders that are lawfully made. As already mentioned, the statutory maximum penalties do not permit the imposition of fines which could be expected to have a really significant deterrent effect. I do not find that there is any particular need for specific deterrence in relation to this Association on the basis of its past conduct. However, the circumstance that it proceeded with the contravening conduct for a further 6 days in the face of the Court's judgment on 9 February 2017 makes this consideration of some relevance.

29. At [47] in the earlier judgment I expressed the tentative view subject to receiving evidence and submissions on penalty that the contraventions appeared to be in the worst category. That view was based primarily upon the explicit defiance involved in the Association knowingly breaching the orders on an ongoing basis with the expression of its willingness to “cop a fine”. On receiving further evidence about the consequences of the strike action, the degree of participation of Association members, the absence of any critical loss of care to clients and the relatively modest financial impact on the Government I conclude that it has been shown the contravention was not as serious as I had tentatively concluded.

30. On the other hand, there can be no discount to penalty for cooperation in the prosecution of the contravention: the Association has fought it on legal grounds, at each stage. This does not give rise to any aggravation of the offence but there is an absence of cooperation in the process which would have entitled the Association to a discount on penalty if exhibited. A large part of the dispute on the question of contravention was centred around whether the Court had power to impose additional injunctions as a means of enforcement. On this, I upheld the Association's position and rejected the prosecutor's contention that there existed such power. I take that into account in recognising that the contest on the summons was to a degree concerned with the scope of this power and not with a denial of the contravening conduct.

Remorse and contrition

32. In paragraph 12 of his affidavit of 17 February 2017 Mr Wright deposed that the Association:

“regrets that on this occasion, it did not feel it could cancel its planned action given the strength of the feeling of its members working in Disability Services and the importance of the issues to its members and the provision of disability services in NSW.”

33. I do not take this as any expression of regret or remorse for the expressly defiant contravention of the Commissioner's orders. I do not consider that the strength of feeling of the Association's members provides any mitigation for the breach that has been involved. The strength of feeling, I infer from all of the evidence before me, is directed to the political issue of whether the Department's Disability Services should be privatised. Counsel for the Association has pointed out that this could not be arbitrated in the Commission. That provides no justification for defying the Commission's orders, nor any mitigation of the seriousness of such a step. It means that the members' strong feelings on this political issue needed to be ventilated in the media or in some other forum, and not by action which was forbidden under a lawfully made order.

34. Many other members of the community would equally have strong views upon the question of privatisation of such services. There would be members of the public with strong views both ways about this. But to breach orders which are made in the framework of an industrial arbitration system designed to protect and assist employees in industrial disputes is an abuse which is not mitigated by the conviction with which underlying political views are held.

The appropriate penalty

35. Taking all of these considerations into account, I consider that the breach that was involved of the orders in this case was, effectively, in the middle of the range of seriousness. I consider that it was of progressively greater seriousness as it continued after the Court's judgment had been published on 9 February 2017.

36. For the first day of the contravention, 2 February 2017, a penalty fixed at half the maximum, namely $10,000 would be appropriate. For each of the seven following days, up to and including the day on which my previous judgment was given, a penalty of $5,000 would be appropriate, which adds up to an additional $35,000. For the remaining 6 days of contravention, I consider that the penalty should be $6,500 for each day to reflect the continued defiance of the Commission's orders notwithstanding the judgment given in this Court. That, on my calculation, would be another $39,000. The total of that is $84,000.

37. Accordingly, the order of the Court is that for the contravention of the orders of the Industrial Relations Commission, as found by order of this Court on 9 February 2017, the defendant is ordered to pay a fine of $84,000.

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Decision last updated: 19 April 2017