James v Planpac International Pty Ltd (No 2)
[2010] FMCA 845
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JAMES v PLANPAC INTERNATIONAL PTY LTD & ORS (No 2) | [2010] FMCA 845 |
| INDUSTRIAL LAW – Penalty – breach of WRA provision regarding payment of accrued annual leave upon termination – whether directors were “persons involved” in the breach – matters relevant to penalty considered where breach was deliberate and ongoing – Anshun estoppel – where earlier proceedings in District Court brought by respondents to recover money owing by the applicant – where earlier judgment awarded unpaid annual leave entitlement following counter-claim for breach of contract – entitlement still unpaid at time of hearing – where company directors not party to earlier proceedings – whether claim for penalty under the WRA could and should have been brought in earlier proceedings. |
| Workplace Relations Act 1996 (Cth), ss.178, 235(2), 717, 718, 719, 728, 841(b) Annual Holidays Act 1944 (NSW), s.4 Workplace Relations (Work Choices) Act 2005 (Cth) Federal Magistrates Court Rules 2001 |
| Planpac International Pty Ltd v James [2010] QDC (unreported) Andrew G. Lang, “Is There a Ratio Decidendi?” (1974) 48 Australian Law Journal 146 |
| Applicant: | BRUCE HUME JAMES |
| First Respondent: | PLANPAC INTERNATIONAL PTY LTD |
| Second Respondent: | DAMIEN JOHN FERGUSON |
| Third Respondent: | GEOFFREY JAMES PLANTE |
| File Number: | SYG 1524 of 2010 |
| Judgment of: | Raphael FM |
| Hearing date: | 12 October 2010 |
| Date of Last Submission: | 12 October 2010 |
| Delivered at: | Sydney |
| Delivered on: | 4 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Meehan |
| Solicitors for the Applicant: | Harris Freidman |
| Counsel for the Respondent: | Mr G Lyneham |
| Solicitors for the Respondent: | Boulton Clearly and Kern Lawyers |
ORDERS
First Respondent to pay a penalty of $27,500.00 pursuant to s.719(1) WRA for breach of s.235(2) WRA. Such penalty to be paid to the applicant within 28 days.
Second Respondent to pay a penalty of $6,500.00 pursuant to s.719(1) WRA for his accessorial liability under s.728 WRA for breach of s.235(2) WRA. Such penalty to be paid to the applicant within 28 days.
Third Respondent to pay a penalty of $6,500.00 pursuant to s.719(1) WRA for his accessorial liability under s.728 WRA for breach of s.235(2) WRA. Such penalty to be paid to the applicant within 28 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1524 of 2010
| BRUCE HUME JAMES |
Applicant
And
| PLANPAC INTERNATIONAL PTY LTD |
First Respondent
| DAMIEN JOHN FERGUSON |
Second Respondent
| GEOFFREY JAMES PLANTE |
Third Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings, commenced by way of application to the Court on 9 July 2010, Mr James seeks orders pursuant to s.719(1) of the Workplace Relations Act 1996 (Cth) (“WRA”) imposing a penalty on all three respondents in respect of a contravention of s.235(2) of the WRA in the first respondent’s failure to pay him his untaken accrued annual leave benefits upon termination of his employment. It is said that the second and third respondents were persons involved in the contravention within the meaning of s.728 of the WRA and thereby taken to have contravened s.235(2). Mr James has standing to make this application pursuant to s.718(2) of the Act and also seeks an order that any penalties awarded be payable to him pursuant to s.841(b). Mr James was an employee of the first respondent from 1 July 2003 to 28 June 2006. He was also a director of the first respondent for a period.
The respondents did not deny that Mr James was not paid his holiday leave entitlements. Indeed, they have only put in issue two matters made in the claims and evidence of the applicant. The first is the alleged accessorial liability of the second and third respondents and the second is the liability of the first respondent (and hence the second and third respondents) by virtue of the operation of the principle of law known as Anshun estoppel. The respondents submit that the Court should dismiss the complaint because the applicant had the opportunity to bring it in certain proceedings between the first respondent as plaintiff and himself as defendant heard in the District Court in Queensland in 2009 and the subject of a judgment of his Honour Durward SC DCJ dated 24 March 2010; Planpac International Pty Ltd v James [2010] QDC (unreported).
The respondents also argue that, if the Court is not minded to dismiss the application, then any penalties awarded should be in the low range. For the reasons which shall appear below, this Court does not accept either of the respondents’ submissions.
History
Planpac is a company which provides architectural and design services. Mr James, Mr Ferguson and Mr Plante were appointed directors upon the company’s incorporation on 7 April 2003. The company operated from Townsville where Mr Plante and Mr Ferguson had an existing architectural business. Mr James had his own business in Sydney. On 1 July 2003 Mr James became an employee of Planpac and remained in its employment until 28 June 2006 when he received a letter terminating the employment. The letter[1] states inter alia:
“As you will be aware, you have certain entitlements upon cessation of your employment, including payment of salary up to and including the date of termination of your employment and accrued holiday leave. I will be happy to discuss these entitlements with you in the context of monies payable by you to the company with a view to setting off those entitlements against monies owing.”
[1] Annexure A to Affidavit of Bruce Hume James sworn 15 August 2010.
Planpac did not make payment to Mr James of any of his entitlements. Instead, it commenced proceedings against him in the District Court of Queensland. On 28 May 2007 Mr James filed an amended defence and counter-claim in that Court. Paragraph 3(f) and (g) of the defence states:
“(f) It was a term of employment that the defendant would be given four weeks annual leave per year paid at his ordinary salary.
(g) It was a term of employment that the plaintiff would be paid his ordinary salary for any period of accrued but untaken annual leave upon termination of employment.”
In the counter-claim under the heading “Breach of Contract” Mr James claimed that he did not use any of his entitlement to paid annual leave during the term of his employment and he had an accrued entitlement to 12 weeks of annual leave at that time. In paragraph 10 he states:
“By reason of the matters pleaded in paragraphs 3(f) and (g) of the defence and paragraphs 7, 8 and 9 hereof, the plaintiff breached the defendant’s contract of employment.
11. As a consequence of the breach of contract pleaded in paragraph 10 hereof, the defendant has suffered loss and damage.
Particulars
The defendant claims payment for 12 weeks accrued but untaken annual leave at $1,201.92 per week [a total of $14,423.00].”
Mr James made other claims against Planpac in his counter-claim in which he was substantially successful. In regard to the annual leave claim, his Honour awarded Mr James the principal sum of $14,246.55 and interest on that sum from the date of termination. His Honour noted that annual leave was not only a contractual matter but also the subject of a statutory obligation under s.4 of the Annual Holidays Act 1944 (NSW). His Honour opined at [189]:
“The defendant submitted that a set-off was not open: that there was no evidence of any contractual basis for a common law set-off and particulars of the set-off were not provided in response to a request by the defendant for the same. The performance of the plaintiff’s statutory obligation was not conditional or a matter of unilateral choice in respect of its observance or not. I do not consider that the plaintiff can succeed on a common law set-off.”
and continued:
“In so far as an equitable set-off is concerned the defendant submitted that this was also not open because a statutory breach had been committed by the plaintiff. In Painter Merryfull Griffith & Assoc Pty Ltd and Timm, Pj [1991] NSWIRComm 7 at p7, Cullen J said in respect of such statutory breaches that “any exercise of discretion pursuant to the principle of equity and good conscience is necessarily subject to these express provisions.”
It is not every litigant who can rely on an equitable remedy: No-one can take advantage of the existence of a state of things which he himself has produced: Lord Finlay LC in NZ Shipping Co Ltd v Societe Des Atelier Et Chantiers de France (1919) AC 1 at p6. In other words “he who seeks equity must do equity”. Rich and Dixon JJ described the true meaning of that maxim in Langman v Handover (1929) 43 CLR 334 (at pp351-352), as being that one who seeks the aid of a Court of equity to enforce a claim, must do justice as to the matters in respect of which the assistance is asked.
I will not exercise a discretion that will permit the plaintiff to rely on an equitable ground to succeed on a set-off.
The defendant is entitled to be paid the principal sum of $14,246.55 and interest on that sum from the date of termination of employment.
Findings in summary
1. The plaintiff was in breach of the contract of employment by summarily dismissing the defendant.
1. The defendant had not committed serious misconduct as an employee.
2. The defendant was entitled to a reasonable period of notice of termination of employment.
3. The plaintiff and the defendant each owed a duty of good faith inter se.
4. A term requiring reasonable notice is implied in the contract of employment.
5. Reasonable notice in this case was a period of 4 months.
6. The plaintiff was obliged to pay the defendant accrued but untaken annual leave upon termination but failed to do so and was in breach of the relevant statutory obligation.
7. The plaintiff in the circumstances was not entitled to the benefit of a legal or equitable set-off.
8. The defendant has succeeded on the counterclaim to the extent to which damages have been assessed.”
In so far as his Honour made reference to the Annual Holidays Act I would, with the greatest respect, make two observations. The first is that to the extent that findings in a case are considered to be part of the “ratio” they should reflect the pleadings; Andrew G. Lang, “Is There a Ratio Decidendi?” (1974) 48 Australian Law Journal 146 at 151. In the instant case, no statutory breach was pleaded by Mr James. His pleading was based solely on contract as the extracts from the defence and counter-claim reveal. The second point is that prior to the commencement of Mr James’ contract of employment the Workplace Relations (Work Choices) Act 2005 (Cth) commenced operation (27 March 2006). On that date the Annual Holidays Act ceased to have legislative force as an act of the NSW Parliament for persons whose employment became subject to the WRA. There is a regime under the WRA contained within Part 7, Division 4 of that Act with reference to s.178 definitions. The effect of the WRA was to render nugatory the Annual Holidays Act; NSW v Commonwealth (2006) 229 CLR 1. Although Toner DCJ suggested in Mason v Citigroup Pty Ltd (2007) 169 IR 120 that the Annual Holidays Act provisions could be considered to be a NAPSA pursuant to Division 1 of Part 3 of Schedule 8 of the WRA, it would appear that the better view, accepted by the plaintiff in that case on appeal, was to the contrary; Citigroup Pty Ltd v Mason (2008) 171 FCR 96. It would follow from these observations that I am of the view that anything said by Durward DCJ in regard to the Annual Holidays Act was obiter and I do not propose to accede to any submission that it evidences the raising of the matter that would support an argument for res judicata, issue estoppel or Anshun estoppel.
Durward DCJ’s judgment was handed down on 24 March 2010. It has not been appealed. The money due in respect of Mr James’ annual holiday entitlements has not been paid. On 9 July 2010 the applicant filed the current application. As at the date of hearing no payment had been made.
Discussion
The Anshun principle takes its name from the dicta of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. In the joint judgments of Gibbs CJ, Mason and Aickin JJ, their Honours cited with approval an extract from Henderson v Henderson [1843] 67 ER 313:
“where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”
In Jeans v Bruce & Ors [2004] NSWSC 539, Einstein J expanded on the relevant test:
“[305] In Anshun, Gibbs CJ, Mason and Aickin JJ similarly held (at 602) that parties and their privies will be estopped from presenting a claim or defence in subsequent proceedings when, although not actually raised in the first action, that matter was “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.” While the application of this test is largely a matter of fact- turning on considerations of (inter alia) expense to the parties, the importance of the issue to the prior proceedings and the motives of the party in failing to raise it- its intended strictness is evident in their Honours express rejection (at 601-2) of the equivalent English formulation to the effect that all matters which "could and therefore should have been litigated in the earlier proceedings" will be caught by this form of res judicata estoppel: Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590, per Lord Kilbrandon.”
I should say here that I am satisfied that the fact that the two directors of Planpac are parties to the current proceedings but were not parties to the original proceedings is not in itself a ground for rejecting the adoption of the Anshun principle; Bradford & Bingley Building Society v Seddon (1994) 4 All ER 217 at 226;
“In my view, it is now well established that the rule in Henderson v Henderson, as a species of the modern doctrine of abuse of process, is capable of application where the parties to the proceedings in which the issue is raised are different from those in earlier proceedings. Indeed, it is inherent in Sir James Wigram V-C's reasoning that, as a general rule, all persons who are to be sued should be sued at the same time and in the same proceedings where such a course is reasonably practicable, and whenever it is so and is not taken then, in an appropriate case the rule may be invoked so as to render the second action an abuse (see eg the Yat Tung Investment case, Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd, Ulster Marine Insurance Co Ltd v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd's Rep 132, the North West Water case, MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675 and Morris v Wentworth-Stanley [1999] 2 WLR 470 at 481 per Potter LJ). In Bragg's case [1982] 2 Lloyd's Rep 132 at 137 Kerr LJ said:
'… it is clear that an attempt to relitigate in another action issues which have been fully investigated and decided in a former action may constitute an abuse of process, quite apart from any question of res judicata or issue estoppel on the ground that the parties or their privies are the same.' (Kerr LJ's emphasis.)"
See also 138-139 per Sir David Cairns and Stephenson LJ respectively.”
I accept that the District Court of Queensland is an eligible court for the purposes of the WRA; s.717, and thus it would have been open to Mr James to seek a penalty in those proceedings. That allows the Anshun principle to be raised but does not answer the question of whether it should be applied. In Gibbs & McAllion Lloyd Pty Ltd v Kinna [1998] VSCA 52 (“Gibbs”) the Victorian Court of Appeal, Ormiston, Phillips and Kenny JJA, considered a case where compensation had been awarded by an Industrial Relations Court for the termination of employment and there was a subsequent action for damages in the Magistrates Court. The Magistrate had dismissed the claim on the ground that the action could not be maintained because of the claims made in it could and should have been joined in the statutory claim in the Industrial Relations Court. Kenny JA gave the principal judgment with which Ormiston and Phillips JJA agreed. But as noted by Robson J in Re AWB Ltd (No 10) [2009] VSC 566 (“AWB”) at [203]:
“Kenny JA delivered the main judgment. Both Ormiston and Phillips JJA agreed with her save that they both expressed reservations on the scope of the principle in Anshun. Phillips JA said that the principle in Anshun may be seen in the ultimate analysis to depend more closely upon the possibility of judgments in conflict than the determination of the appeal before him, though not necessarily for the same cause of action.
[204] Ormiston JA said that the test that “it would have been unreasonable not to rely on it” involved a significant double negative because the issue was “whether it was unreasonable to defer reliance upon the defence or cause of action”. He said that “if it cannot be shown to have been unreasonable not to have relied earlier on the defence or cause of action, then [the Anshun estoppel] will not shut out a party’s later reliance on the defence or cause of action, unless some other principle of estoppel or the law can be called in aid.”
In Gibbs at [12] Kenny JA noted:
“The issues to be determined by the Judicial Registrar were (1) whether Kinna was an employee of Gibbs, the McAllions or McAllion Lloyd; (2) if so, whether his employment was terminated by the relevant employer; and (3) if so, whether the employer had a valid reason for terminating his employment. In a decision delivered on 21 February 1997, the Judicial Registrar found that Gibbs had agreed to pay Kinna $1,000 per week for full-time work; that upon its incorporation on 14 June 1996, McAllion Lloyd became substituted as Kinna's employer in the place of Gibbs; and that McAllion Lloyd had, without valid reason, terminated Kinna's employment contrary to s.170DE(1) of the IRA. The Judicial Registrar found that it was appropriate to order that McAllion Lloyd pay Kinna compensation representing four weeks wages at a rate of $1,000 per week, a sum of $4,000. …
[13] On 14 March 1997, twenty-one days after the Judicial Registrar's decision, Kinna commenced proceeding in the Magistrates' Court, naming Gibbs and McAllion Lloyd as first and second defendants. In that proceeding, Kinna claimed, against both defendants, damages for breach of contract of employment and, against the first defendant, Gibbs, damages for misleading and deceptive conduct in contravention of s.52 or s.53B of the Trade Practices Act 1974 (Cth.) and s.14 of the Fair Trading Act 1985 (Vic). …
[14] By their defence, the defendants, Gibbs and McAllion Lloyd, alleged, amongst other things, that the plaintiff, Kinna, was estopped from maintaining his action against them in the Magistrates' Court because of the matters heard and determined in the Industrial Relations Court. … ”
At [17] her Honour noted the employer’s submissions that the proceedings in the Industrial Relations Court concerned the same parties and the same or substantially the same facts as were to be the subject of the Magistrates Court proceedings. Plus, it was unreasonable for the claims not to have been included in that proceeding. These arguments resonate with those put by the respondents in the instant case. At [22] her Honour noted some authorities which tended to confine the scope of Anshun before noting the two conditions precedent to the application of the principle, the first being that the cause of action must be one that could have been raised in the previous proceedings and the second; “it must appear that the same or substantially the same facts will arise for consideration”, before stating:
“These are necessary but not sufficient conditions for the application of the principle in Henderson v Henderson.”
And then at [25] and [26]:
“There is at least one factor, however, which is indicative of "unreasonableness" in not asserting a cause of action in an earlier proceeding: if any judgment or order which might be made on the cause of action in the subsequent proceeding would conflict with a judgment or order in the earlier proceeding, then it will ordinarily be unreasonable to refrain from raising the cause of action in the first proceeding. In this context, the majority in Anshun's Case said, at 603-4:
"It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment. ... By 'conflicting' judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.”
This factor was the most important in Anshun's Case. It also explains the outcome of a number of other cases: see, for example, Boles v. Esanda Finance Corporation Ltd. (1989) 18 N.S.W.L.R. 666, at 673 per Samuels, J.A. with whom the other members of the Court agreed; Rahme v. Commonwealth Bank of Australia (unreported, Court of Appeal, Supreme Court of New South Wales, 20 December 1991) and, at first instance, (1991) A.T.P.R. 41-089 per Bryson, J.; Bryant v. Commonwealth Bank of Australia [1995] FCA 1299; (1995) 57 F.C.R. 287, at 294, 298; and Westpoint Corporation Pty. Ltd. v. Coles Supermarkets Australia Pty. Ltd. (1996) 71 F.C.R. 584, at 592, 595. It suffices to say that in this case the respondent was not seeking to pursue any claim in the Magistrates' Court which might give rise to a judgment or order "conflicting" with the order made by the Judicial Registrar in the Industrial Relations Court. Counsel for the appellants did not contend otherwise.”
In the circumstances of the instant case, it is not possible that a judgment or order conflicting with the order made by Durward DCJ can arise. This is true for a number of reasons. Firstly, his Honour made an order for payment of the unpaid annual leave. There is no claim for unpaid annual leave in this case. Second, the respondents admit that the annual leave was unpaid at the time of Durward DCJ’s judgment and remains unpaid. Third, the applicants accept that their actions in not paying the annual holiday payments did constitute a breach of the WRA as alleged. The only issue which they debate (aside from Anshun) is the accessorial liability of the two directors. But the two directors were not party to the original proceedings. At [28] Kenny JA opined:
“Whilst the likelihood of inconsistent judgments would, generally speaking, satisfy the criterion of unreasonableness, I assume for the purposes of this case that the criterion may be satisfied even when no such likelihood arises. If this be correct, then, in cases where there is no risk of inconsistent judgments, to decide whether or not it was unreasonable for a plaintiff not to litigate closely related issues in the one proceeding requires consideration of all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of any trial, any real or reasonably perceived difficulties in raising the relevant claim earlier, and any other explanation for the failure to raise the claim previously. As the majority said in Anshun's Case, at 603:
“... there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.”
See also Boles v. Esanda Finance Corporation Ltd. (1989) 18 N.S.W.L.R. 666, at 673; and Ling v. Commonwealth (1996) 68 F.C.R. 180.”
As Robson J noted in AWB, “reasonableness” was considered by the NSW Court of Appeal in Zavodnyik v Alex ConstructionsPty Ltd (2005) 67 NSWLR 457 per Handly JA with Mason P and Latham J agreeing. That Court decided to invoke the principle, his Honour stating:
“In this case, there is a substantial if not total overlap in the facts underlying both claims, and the amount now sued for was comprised within the earlier claim. There is therefore every reason to require that both be litigated at the one time, minimising cost and delay to both parties, and the demands on court time.”
In Clout & Ors v Klein & Ors [2001] QSC 401 at [47] Holmes J approved of the views expressed by Brennan and Dawson JJ in Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332.
“A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings ... cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counter-claimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v Anshun Pty Ltd as holding the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first.”
In the District Court case, Planpac sued Mr James for monies allegedly due from him to the company for the use of an American Express credit card, for use of a mobile phone, for a loan given to a client and for office equipment purchased for him. The claim in respect of the personal use of the credit cards succeeded in the sum of $8,727.49. The claim in respect of the mobile phone failed. The claim in respect of the loan failed. The claim in respect of the office equipment failed. Against these causes of action, Mr James cross-claimed for the payment out of reasonable notice and for superannuation on the loss of the salary for the reasonable notice period, the untaken holiday pay and a director’s loan made by him to the company. He succeeded on all three. The proceedings were purely an argument about money. At the time the cross-claim was commenced, there was no certainty that Mr James would recover his unpaid holiday payments, his right to them was established by the decision of Durward DCJ. I cannot see then how it could be considered to be unreasonable not to ask the District Court to decide a penalty case against not only the company but the two alleged accessories. A matter that is strongly argued by the applicant to defeat the imposition of the Anshun principle is that Mr James is only one of several persons who might have brought these very proceedings. Under s.718(1) of the WRA proceedings for a penalty may be brought by:
“(a) an employer whose employment is subject to the Standard;
(b) an organisation of employees (subject to subsection (6)):
(c) an inspector”
If there can be no question of an Anshun estoppel being pleaded against proceedings commenced by an inspector, why then should it be raised in proceedings brought by Mr James in his status as a “common informer” in s.718 of the Act. Mr James is no less a person entitled to institute proceedings under s.235(2) WRA than the other persons referred to in s.718: Vehicle Builders Employees Federation of Australia v General Motors Holden Pty Ltd (1977) 18 ALR 654; see also CPSU v Telstra [2001] 108 IR 228 at [23-25] per Finkelstein J. Then why should the Court exercise its discretion to bar such proceedings because he had an opportunity, not available to any of the others, to raise the matter in what I regard as only tangentially related proceedings.
This Court is obliged to look at “all the circumstances” of the case. It is not unreasonable then to take into account the fact that proceedings for a civil penalty are of a quasi criminal nature with serious repercussions for persons or entities found liable. As such, the proceedings are not lightly brought. Though I have no evidence, my experience tells me that there must have existed a possibility that, if Planpac had paid the judgment speedily, no further proceedings would have been brought and the odium would have been avoided. Is it not unreasonable for an applicant in the position of Mr James to wait and see the result of Durward DCJ’s decision. My views coincide with those expressed by Holmes J in Clout (supra) at [51]:
“Although it might be fairly said that the factual matrixes of the two proceedings had sufficient in common to warrant the bringing of that claim in the earlier proceedings, that of itself cannot require the application of the principle.”
In their response, the respondents relied heavily on what fell from the NSW Industrial Relations Commission in Notaras v Knight (2008) 181 IR 364 (“Notaras”). This decision considered the nature of the Anshun principle from the point of view of Henderson, then quoted extensively from the judgment of the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1 and, in particular, approved of the views expressed by Lord Bingham at [30-1] where I note his Honour said:
“It is however wrong to hold that, because a matter could have been raised in early proceedings, it should have been so as render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focussing attention on the crucial question whether in all the circumstances a party is misusing or abusing the process of the Court by seeking to raise before it the issue which could have been raised before.”
In Notaras the Full Bench came to the view that Anshun should not be applied:
“It would, in our opinion, be inequitable to preclude the respondent from proceeding to pursue her claim for underpayment of wages under an industrial agreement in circumstances where her intention to so proceed was made clear to the appellant at the time that the appellant compromised the first claim.” [53]
I do not see anything in the decision of this Commission which militates against me deciding that in all the circumstances of the instant case the Anshun principle should not apply.
The accessorial liability of the second and third respondents
I am satisfied to the appropriate standard described in Bringinshaw v Briginshaw (1938) 60 CLR 336 as explained by Branson J in Qantas Airways Limited v Gama (2008) 247 ALR 273 that the second and third respondents who are both directors of Planpac were persons involved in the non-payment of Mr James’ annual leave entitlements in breach of the WRA. Section 728 of the WRA provides:
“(1) A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2)For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.”
The facts which are relied upon to come to the conclusion set out above are found substantially in the evidence of Mr James in his affidavit upon which he was not cross-examined. This shows that the second respondent, Mr Ferguson, was the Managing Director of Planpac who had overall responsibility for its business including the administration of wages, salary and payroll, that Mr Ferguson made the decision not to pay Mr James his annual leave entitlements as part of a joint decision between himself and Mr Plante, that Ms Martin stated under oath before Durward DCJ that Mr Ferguson instructed her not to pay Mr James his annual leave entitlements, that the letter which effected the termination of Mr James’ employment as extracted at [4] of these reasons shows that Mr Plante knew that annual leave was owing and finally, and most significantly from my point of view, both Mr Plante and Mr Ferguson as directors of the company were aware of the decision of his Honour Durward DCJ in March 2010 and did not and have not yet instructed the company to make the payment nor produced any evidence to the effect that the company is unable so to do. It is trite law that a company is inanimate. As Cairns LJ said in Ferguson v Wilson (1866) 2 Ch App 77 at 89:
“The company itself cannot act in its own person, for it has no person; it can only act through directors and the case is, as regards those directors, merely the ordinary case of principal and agent.”
Failure to act by a company cannot be separated from the failure to act by its personnel. Where the company is a small proprietary company managed and controlled by its directors and where no evidence is brought that the directors were unaware of the obligation to make the payment (indeed quite the opposite) there is simply no escape from accessorial liability.
Penalties
A Court which hears, as this one does, a regular diet of penalty proceedings and which, with the aid of experienced counsel appearing for parties and of its own researches, keeps up to date with developments in this specialist field senses, perhaps more acutely than a more generalist Court which only deals with them from time to time, the danger of being accused of citing by rote the matters appropriate to be taken into consideration. A Court could even feel embarrassment at quoting once again the highly relevant and considered views of Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 246 ALR 35 at [91] that:
“These matters should not be treated as “a rigid catalogue of matters for attention”. The overriding principle is for the Court to “fix 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 obligation.””
The Court is of course sensible of the fact that it is not writing for solely an appellate division but is explaining to those whose conduct has offended the reasons why it has chosen a particular penalty to be imposed. It is for this reason that it is necessary to set out those matters that the Court proposes to take into account even though they have been expressed before in such cases as CFMEU v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at 232 [7-8] per Branson J; Stewart-Mahony v CFMEU (2008) 177 IR 61; Alfred v Wakelin (No 1) [2008] FCA 1455; Alfred v Wakelin (No 4) (2009) 180 IR 335; Temple v Powell (2008) 169 FCR 169.
The circumstances in which the relevant conduct took place including whether the conduct was undertaken in deliberate defiance or disregard of the Act
The company and its directors all knew that Mr James was entitled to be paid his annual leave entitlements upon the termination of his employment. So much is clear from the letter quoted and the other evidence cited by me in consideration of the directors’ accessorial liability. The most that could be said for the respondents is that they thought they had a set off by virtue of monies owed by Mr James to the company. In arguendo I was critical of the respondents, putting to them that it was unlikely that a Court would support a set off against a statutory obligation, but perhaps this view was too harsh bearing in mind the dicta of the NSW Court of Appeal in Rodenstock Australia Pty Ltd v Ley [2002] NSWSC 957 at [40]. But whatever might have been the case prior to the judgment of Durward DCJ, it was not so thereafter. It is now eight months since his Honour’s judgment and no payment has been made. The offence (to use that word neutrally) is continuing. The fact that the parties sought to rely on the Anshun principle in order to avoid these proceedings and hence the penalties rather than make the payment which they had been obliged to make for breach of contract indicates to me that they came very close to deliberate defiance or disregard of the provisions of the WRA. As such, it indicates that a penalty in the highest range should be considered.
The nature and extent of any loss or damage sustained as a result of the breach
Mr James has not been paid his holiday entitlements and has lost both them and the interest thereon. I have calculated that interest upon the principle sum found to be owing by Durward DCJ of $14,246.55 from 28 June 2006 until 4 November 2010 is $5,895.34 meaning that the applicant is out of pocket in the total sum of $20,141.89. This amount is substantial for an individual and would not, to my mind, mitigate the imposition of a penalty in the higher range.
Whether there has been similar previous conduct by the respondent
I am informed that there has not been similar previous conduct by these respondents. Indeed, all other employees of the company who were dismissed at the same time as Mr James were paid their entitlements. Mr James argues, and it is difficult to cavil with him, that this indicates a deliberate action on the part of the company towards him.
Whether the breaches arose out of one course of conduct
There was only one breach, although it is continuing.
The size of the business enterprise involved
I have very little information about the business enterprise. What I have indicates that it is a small proprietary company engaged in architectural and landscaping activity in the Townsville region.
Whether senior management was involved in the breaches
Senior management was involved as previously discussed.
Whether the party committing the breach has exhibited contrition
None of the respondents has exhibited any contrition whatsoever. They have at all times sought to avoid this prosecution.
Whether the party committing the breach has taken corrective action
None of the respondents put on any evidence.
Whether the party committing the breach has cooperated with enforcement authorities
Mr James is the “enforcement authority” for the purposes of this case. The first respondent says it has cooperated by not denying the breach. The second and third respondents say they have cooperated by not putting on any evidence, thus allowing the matter to be determined with the minimum of court time. I have noted these observations.
The need for specific and general deterrence
A primary objective of penalties is deterrence; Leighton Contractors Pty Ltd v CFMEU [2006] WASC 317; (2006) 164 IR 375 at 391 per Le Miere J. Deterrence must be both specific and general: specific deterrence in this case relating to the need to deter the respondent from further contravention of the WR Regulations. Much will depend on the attitude expressed by the party in breach to things like remorse and steps taken to ensure that no future breach will occur; Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170 at [37]. 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 need for specific deterrence in this case is substantial. I have no evidence about the continuing operation of the first respondent but I understand that the second and third respondents are now operating a similar business from the same locality. They must clearly be made to realise that they cannot repeat their conduct. The need for specific deterrence in this case, in my view, places the likely penalty in the most serious category. In regards to general deterrence, I think it is important through the publication of these reasons that persons in a similar position to all of the respondents herein are aware that continual refusal to pay monies ordered by a court of competent jurisdiction which constitutes, in addition to a breach of contract, a breach of statutory obligation will not be tolerated. That one must pay so that all may learn is a harsh but necessary principle. In this case the penalty should be in the most serious category.
The penalties available under s.719(1) of the WRA are currently 60 penalty units of $110.00 each for an individual or 300 penalty units of $110.00 each for a body corporate. I do not hold it against the respondents that they have asserted their right to challenge the bringing of these proceedings. I respect and understand the arguments put forward by their counsel for applying the Anshun principle. The penalty should certainly not be increased because of their defence. On the other hand, the fact that the company accepts that it is in breach of the WRA and has still not made any payment indicates to me the appropriateness of a penalty very near the top of the most serious range. In regard to the second and third respondent, I repeat my remarks in regard to their defence under the Anshun principle. I do not take such a sanguine view of their defence against their accessorial liability. It seems to me to have been clear beyond all doubt that they were such persons and the fact that they brought no evidence to dispute this would appear to indicate that they did not seriously believe anything to the contrary. In those circumstances, once again, a penalty in the upper part of the higher range is, to my mind, appropriate.
The penalty which I would impose upon Planpac International Pty Ltd is of 250 penalty units or $27,500.00. The penalty I would impose severally upon each of the second and third respondents is 55 penalty units or $6,500.00. These penalties shall be paid to the applicant within 28 days. The respondents have argued that the penalties should be paid to the Consolidated Revenue Fund but, in my view, it is appropriate that the penalties should be paid to the complainant who has carried the burden of bringing the proceedings. This is the approach that has been taken with some regularity in the Federal Court; National Tertiary Education Industry Union v Central Queensland University [2008] FCA 481 at [50].
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of FM Raphael FM
Associate:
Date: 4 November 2010
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