Ingersole v Castle Hill Country Club Limited
[2015] FCCA 1055
•19 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| INGERSOLE v CASTLE HILL COUNTRY CLUB LIMITED | [2015] FCCA 1055 |
| Catchwords: INDUSTRIAL LAW – Breach of s.44 of the Fair Work Act 2009 (Cth) – factors relevant in relation to imposition of penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 45, 117, 340, 546 |
| Australian and International Pilots Association v Qantas Airways Ltd [2009] FCA 500 Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 Blandy v Coverdale NT Pty Ltd(2008) 178 IR 150; [2008] FCA 1533 Communications, Electrical, Electronic, Energy, Information, Postal, Pulmbing and Allied Services Union of Australia v Telstra Corporation Ltd [2006] FCA 1607 Fair Work Ombudsman v Ultra Tune Australia Limited (2012) 225 IR 326; [2012] FMCA 560 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Public Service Association (SA) Inc v The State of SA (Department of Health) & Ors [2012] SARIC 5 |
| Applicant: | ELIZABETH INGERSOLE |
| Respondent: | CASTLE HILL COUNTRY CLUB LIMITED |
| File Number: | SYG 1478 of 2012 |
| Judgment of: | Judge Barnes |
| Hearing date: | 19 March 2015 |
| Delivered at: | Sydney |
| Delivered on: | 19 March 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Sullivan Fernan Lawyers |
| Counsel for the Respondent: | Mr S. Prince |
| Solicitors for the Respondent: | HWL Ebsworth Lawyers |
ORDERS
No penalty be imposed on the Respondent.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1478 of 2012
| ELIZABETH INGERSOLE |
Applicant
And
| CASTLE HILL COUNTRY CLUB LIMITED |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This matter is before me as a penalty hearing in relation to a failure by the Respondent, Castle Hill Country Club Pty Limited (the Club) to comply with s.117(1) of the Fair Work Act 2009 (Cth) (the FWA). The Club terminated the Applicant’s employment on 1 March 2012 prior to the date on which written notice of the day of the termination was given to her. This amounted to a contravention of s.44 of the Fair Work Act (see Ingersole v Castle Hill Country Club Limited [2014] FCCA 450).
The Respondent relied on an affidavit of David Alan Geraghty, the Chairman of the Club, sworn on 13 November 2014. He was required for cross-examination. The Respondent also provided written and oral submissions in relation to penalty. In essence, the Respondent submitted that in the particular circumstances of this case it was appropriate that no penalty be imposed.
The Applicant did not take issue with the Respondent’s submission that it is appropriate that no penalty be imposed. The solicitor for the Applicant stated that he did not seek to address the Court on penalty, except to indicate that the parties had previously reached agreement (in September 2014) in relation to penalty on the basis of a misunderstanding that they could settle this aspect of the matter. Mr Sullivan indicated that he did not resile from the discussion that took place in September 2014 and in that context made no submissions on what the penalty should or should not be.
No issue is raised in relation to the Court’s jurisdiction or power under s.546 of the FWA. The Court may order a person to pay a pecuniary penalty that the Court considers appropriate if it is satisfied that the person has contravened a civil remedy provision. The Respondent is a corporation that contravened s.44(1) of the FWA, a civil remedy provision. At the time of the contravention the maximum penalty that the Court could impose in respect of such contravention was $33,000.
As the Respondent submitted, the power under s.546 of the FWA is a discretionary power. There is no principle or requirement that the Court must, in all cases of proven contravention, impose a penalty. The FWA does not give any express or explicit guidance about the circumstances in which a penalty will be appropriate. Nor does it give any indication as to the criteria which might guide the Court in relation to the exercise of the discretion or the determination of the level of penalty that is appropriate.
There is, however, a checklist of factors that courts have suggested may be taken into account. In Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 (at [14]) Tracy J referred with approval to the “non-exhaustive range of considerations” identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 to which regard may be had in determining whether particular conduct calls for the imposition of a penalty and if it does, the amount of the penalty.
I have considered these factors but also bear in mind that it is necessary to have regard to the particular circumstances of the individual case and to all the evidence. The check list is no more than that. It is a starting point (see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 (at [91]) per Buchanan J; Communications, Electrical, Electronic, Energy, Information, Postal, Pulmbing and Allied Services Union of Australia v Telstra Corporation Ltd [2006] FCA 1607 at [12]; Blandy v Coverdale NT Pty Ltd (2008) 178 IR 150; [2008] FCA 1533 at 9230 and Fair Work Ombudsman v Ultra Tune Australia Proprietary Limited (2012) 225 IR 326; [2012] FMCA 560 at [72]).
The nature and extent of the conduct which led to the contravention and the circumstances which gave rise to the breach were canvassed in some detail in my judgment in Ingersole (at [351]). The Respondent failed to comply with s.117(1) of the FWA in that it did not give the Applicant written notice of the termination of her employment prior to or on the day of the termination of her employment, that is, 1 March 2012. She was given verbal notice of termination and the reason for the termination and informed that she would be paid her entitlements on 1 March 2012. She did not receive, and was not deemed to receive, written notice of termination until Tuesday, 6 March 2012.
This is a technical breach of a provision which is somewhat lacking in clarity (see Ingersole at [374] – [384]). It occurred in circumstances in which a notification of termination letter addressed to Ms Ingersole was sent to her by registered post on 1 March 2012. I accept that the fact that the Club, through its employee Ms Turner, took steps to ensure that a notice of termination letter was sent by post on 1 March 2012, demonstrates that it knew it was required to give the Applicant written notice of termination and that it attempted to comply with that obligation. The Club’s “mistake” was in not understanding that the Act required the Applicant to receive the written notice by the day of the termination.
The contravention occurred in circumstances where there was no prior authority on this point. On my view of the interpretation of the Act, it was necessary for the Applicant to receive the written notice by or on the day of termination. The Respondent’s mistaken belief that posting the letter on that day would suffice was an understandable, albeit mistaken, belief.
Mr Geraghty’s evidence is clear. He is the chairman of the Club. I accept that while the Respondent was mistaken, this is not a case in which it can be said that it ignored or wilfully disregarded its obligations under the FWA. It made efforts to comply. It not only informed Ms Ingersole in person but also gave her written notice of termination, albeit that it did not (understandably) appreciate the formal and particular requirements under s.117 of the FWA and the statutory meaning of the word “given” (as considered in Ingersole at [376] – [384]).
There is nothing to suggest that the contravention was in any sense wilful. The degree of culpability of the Club is to be seen in light of the technical nature of the contravention.
The Applicant did not claim that this technical breach of s.44 of the Act (by the failure to comply with s.117) had any substantive effect on any other employee. On the evidence before me it was an isolated incident of a technical breach in circumstances where there was an attempt to notify Ms Ingersole in writing of her termination.
This aspect of the proceedings was a very small part of a much broader claim. In particular the Applicant brought an adverse action claim relating to the reason her employment was terminated and the process the Club adopted in terminating her employment. She unsuccessfully alleged breaches of s.340 and s.45 of the FWA.
The Respondent submitted that in the context of the range of claims brought by the Applicant the breach as found by the Court was relatively insignificant. I am not entirely persuaded that the significance of a breach ought to be determined by reference to the other claims that were brought in the same proceedings. The significance of the breach is a matter that stands or falls on its own. Nonetheless, I accept that in this case, having regard to all of the factors, the breach was relatively insignificant. It was not part of and does not reveal any systematic or deliberate corporate strategy to interfere in the rights of Ms Ingersole or employees generally.
The circumstances in which the termination occurred are discussed in my earlier judgment. Relevant to the s.117 breach, the Applicant attended a meeting at the Club’s premises on the morning of 1 March 2012 during which time she was notified that her employment was to be terminated by reason of redundancy. Ms Ingersole was advised that she would be provided with a letter of termination to be sent that day by registered post. According to Mr Geraghty, she did not ask to be provided with a written notice of termination before she left. I accept Mr Geraghty’s evidence that had Ms Ingersole asked to be provided with a written notice of termination before she left the premises then the Club would have provided her with such a letter.
I also accept Mr Geraghty’s evidence that the Club thought that it had complied with the legal obligations by posting, via registered mail, Ms Ingersole’s written notice of termination to her on the day that her employment was terminated and that it was not aware that in the particular circumstances of this case that action did not comply with the FWA.
In other words the only contravention established, represented a breach caused by a lack of understanding on the part of the Club as to what was technically required of it under s.117(1) of the FWA.
The Respondent submitted that in all the circumstances the contravention of s.44 represented a breach caused by misunderstanding that should not give rise to a penalty. Similarly in Australian and International Pilots Association v Qantas Airways Ltd [2009] FCA 500 the Federal Court held that it was appropriate not to impose a penalty in circumstances involving a failure by an employer to understand the significance of an expression in the relevant provisions of an enterprise agreement. An analogy can be drawn with the failure of the Club to understand the technical provisions of the FWA. The contravention was not wilful. It was explicable. An effort was made on a reasonable basis to comply with its obligation to give notice to Ms Ingersole, not only orally on the day of termination but also by a letter sent to her by mail on that day. The degree of culpability on the part of the Club is substantially mitigated in these circumstances (also see Public Service Association (SA) Inc v The State of SA (Department of Health) & Ors [2012] SARIC 5 at [88]).
It is also relevant to have regard to any evidence as to the nature and extent of any loss or damage sustained as a result of the breaches. The Applicant has not relied on any evidence in relation to penalty. It is not is dispute that, as I canvassed in my earlier judgment, there was evidence that the Applicant was paid four weeks notice at the date of her termination. This necessarily included the amount she would have earned had she remained an employee from 1 March 2012 until 6 March 2012. The parties have agreed that the total amount of the loss or damage sustained by the Applicant was, at most, limited to the salary and benefits to which she would have been entitled had her employment continued from 1 March 2012 until 6 March 2012. The amount for this period ($1,066.36) was paid to Ms Ingersole by agreement on 30 September 2014. As set out in Mr Geraghty’s affidavit it included not only salary but also Ms Ingersole’s other entitlements. In other words, the loss or damage initially suffered by the Applicant as a result of this breach was small. She has been compensated. The quantum of the loss was also small having regard to the nature of the proceedings.
The Club, a non-profit organisation, has been in existence since 1950. It is a relatively small organisation. It employs over 50 people. It consists of some 1,500 members. The Respondent contended that its size was supportive of the conclusion that it was inappropriate to impose a penalty in relation to the contravention in issue. There is no evidence that it has previously engaged in similar conduct. I accept Mr Geraghty’s evidence that the Club has never before been prosecuted for a breach of or found to have breached a provision of the Fair Work Act or previous Federal or State industrial legislation or regulations.
The fact that there is only one isolated breach means that there is no issue in relation to whether there are distinct breaches or a course of conduct.
The Respondent has offered an explanation for its failure to comply. It acted upon a misunderstanding as to the requirements of the legislation. There was a subjective and understandable confusion about the legal effect of making a payment in lieu of notice to the Applicant. That is clear from the correspondence at the time. The Respondent was not clear as to whether the Applicant’s employment would end legally on 1 March 2012 or 28 March 2012. While this does not alter what was in fact the day on which there was an intention to terminate the Applicant’s employment, it does demonstrate that there was some misunderstanding about what was required and confusion about the legal effect of the notice. The board was involved in the breaches but the CEO was on leave at the time. However this is not a case in which there was some culpability on behalf of senior management in the nature of a deliberate or wilful breach or disregard for obligations. Rather, the nature of the contravention was a misunderstanding as to the date on which notice was deemed to be given under s.117 of the FWA.
While the Respondent maintained in the earlier proceedings that it had not breached s.117, that is to be seen in light of the technical nature of the provision and the absence of clear authority. This is not a case in which the Respondent maintained that there was no contravention in the face of conflicting decisions of either this Court or, more relevantly, the Federal Court.
Some issue appeared to be taken in cross-examination of Mr Geraghty with the fact that the expression of contrition in his affidavit did not appear until the affidavit was sworn on 13 November 2014. Given the background to and circumstances leading up to the penalty hearing and the attempts between the parties to resolve this matter, I place no weight on the fact that this expression of contrition did not appear until that date. There was an acceptance by the Respondent of the contravention. There were clearly negotiations after the hearing in order to meet the Club’s obligation to Ms Ingersole.
I accept that Mr Geraghty as Chairman (and, as he understands it, on behalf of the Club) offered an unqualified apology for the misunderstanding and contravention of s.44 of the Act, notwithstanding that there is not a formal board resolution to that effect. I also accept Mr Geraghty’s evidence that, insofar as it can, the Club intends to comply with the Fair Work Act. I note (relevant to the issue of whether any corrective action has been taken) that the Club has taken steps to engage a specialised industrial relations consultant to provide ongoing consultation and advice services in relation to employment matters including, relevantly, termination of employment. Mr Geraghty gave evidence about the work done with the consultant in assisting the Club to ensure that it meets its obligations.
There is evidence of the Club’s community involvement in the local community of Castle Hill and its surrounds. While this does not relate directly to contrition and cooperation, it is part of all the circumstances to be taken into account in determining the issue of penalty.
In relation to the need for specific and general deterrence, in this case the focus is on the likelihood of the contravening party being involved in a similar contravention in the future. I am satisfied on the evidence before the Court that the risk of re-offending in this case is extremely low. The particular circumstances of the contravention, the actions that have been taken by the Club since that time to ensure that it meets its obligations under the Act and the nature of the contravention in question are such that I am satisfied that there is no apparent risk that the Respondent will engage in further contraventions of s.44 of the FWA by virtue of a failure to comply with s.117 of the FWA. Indeed the actions that it has taken indicate a clear commitment to comply with all the provisions of the Fair Work Act.
In relation to general deterrence and whether a penalty should be imposed of a kind that would be likely to act as a deterrent in preventing similar contraventions by other persons or organisations, I accept that the contravention in this case occurred in circumstances of misunderstanding and was inadvertent, but not wilful or deliberate. It has been corrected by payment to Ms Ingersole. It has been addressed for the future in relation to other employees by the actions that the Club has taken. The effect of s.117 has been clarified in these proceedings. In my view this is not a case in which it is necessary as a matter of general deterrence to impose a penalty on the Club.
Having regard to the particular circumstances of this case and the evidence before me, the submissions of the Respondent and the Applicant’s failure to demur or disagree I am satisfied that the contravention was an inadvertent and understandable mistake. The Club gave oral notification to Ms Ingersole on 1 March 2012 of her termination and of the reason for termination as well as of the fact that she would receive her entitlements. It then endeavoured to give her written notification by sending a letter to her by prepaid post (a method that is provided for in the somewhat inadequate and incomplete note to s.117 of the Act). The misunderstanding has been corrected. Ms Ingersole has been compensated. It cannot be said that there is a need for specific or general deterrence having regard to the circumstances, the nature and extent of the loss and damage suffered, the rectification and the overall context in which this occurred. I am satisfied that in this particular case it is appropriate that, despite my finding that there was a breach of s.44 by virtue of the failure to comply with s.117 of the Act, no penalty should be imposed on the Club.
Finally I note that the need foreshadowed in my original judgment for short minutes of order or submissions in relation to quantification of compensation has been overtaken by events. The parties have reached an agreement and money has been paid to the Applicant in respect of the contravention of s.44 of the Act. It is appropriate to order only that no penalty be imposed on the Respondent.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Associate:
Date: 27 April 2015
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