Kiernan v Naismith Truck Movers Pty Ltd
[2024] FedCFamC2G 618
•19 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Kiernan v Naismith Truck Movers Pty Ltd [2024] FedCFamC2G 618
File number: SYG 666 of 2022 Judgment of: JUDGE SYMONS Date of judgment: 19 July 2024 Catchwords: INDUSTRIAL LAW – application for pecuniary penalties – agreed contraventions - breach of National Minimum Wage Orders and Road Transport and Distribution Award 2010 – significant underpayment – no evidence of contrition or measures to prevent recurrence of offending practices - grouping of contraventions – significance of an earlier related proceeding – no declaratory relief granted – significant penalties imposed Legislation: Evidence Act 1995 (Cth), ss 128, 140.
Fair Work Act 2009 (Cth), ss 12, 45, 293, 538, 539, 546, 557, 557A, 550.
National Minimum Wage Order 2015.
National Minimum Wage Order 2016.
National Minimum Wage Order 2017.
Road Transport and Distribution Award 2010 Cll, 12.5, 15.2, 16.2(f), 16.4(e), 19, 22.1, 26.3, 27.1, 27.3, 28.1, 28.2.
Road Transport (Long Distance Operations) Award 2010.
Cases cited: Australian Building and Construction Commission v Pattinson (2022) 274 CLR 450; [2022] HCA 13.
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155; [2018] FCAFC 97.
Cooper v Naismith Truck Movers Pty Ltd [2021] FedCFamC2G 221.
Fair Work Ombudsman v Australian Sales & Promotions Pty Ltd & Anor [2016] FCCA 2804.
Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor (2016) 313 FLR 126; [2016] FCCA 2626.
Fair Work Ombudsman v Lohr (2018) 356 ALR 424; [2018] FCA 5.
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v PTES [2023] FCA 934
Impiombato v BHP Group Limited (No 5) [2024] FCA 591.
Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; [2010] NSWCA 331.
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; [2014] FCAFC 62.
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: Division 2 General Federal Law Number of paragraphs: 182 Date of last submissions: 16 November 2023 Date of hearing: 16 November 2023 Place: Melbourne Solicitor for the Applicant: Mr J Mattson of Bartier Perry Counsel for the Respondents: Mr M Garozzo Solicitor for the Respondents: Kennedys Law ORDERS
SYG 666 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: STEVEN THOMAS KIERNAN
ApplicantAND: GLOBAL TRUCKING PTY LTD (FORMERLY KNOWN AS NAISMITH TRUCK MOVERS PTY LTD)
First RespondentDARYL JAMES NAISMITH
Second Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
19 JULY 2024
THE COURT ORDERS THAT:
1.The name of the first respondent be amended to “Global Trucking Pty Ltd (formerly known as Naismith Truck Movers Pty Ltd)”.
2.The first respondent pay pecuniary penalties totalling $153,090.
3.The second respondent pay pecuniary penalties totalling $14,742.
4.The penalties referred to in orders 2 and 3 be paid to the applicant within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE SYMONS
INTRODUCTION
By a statement of agreed facts filed on 17 May 2023 (SOAF), the parties agree to a range of matters that engage the Court’s jurisdiction to make orders requiring the respondents to pay pecuniary penalties to the applicant in respect of admitted contraventions of ss 45 and 293 of the Fair Work Act 2009 (Cth) (FW Act). As a result of the contraventions the applicant, Mr Kiernan, was underpaid an amount of approximately $50,000. The liability of the second respondent, Mr Naismith, arises by reason of his involvement, within the meaning of s 550 of the FW Act, in these contraventions.
During these proceedings, the first respondent (previously known as “Naismith Truck Movers Pty Ltd”), changed its name to Global Trucking Pty Ltd which explains my reference in this judgment to “Global Trucking”.
AGREED FACTS
The parties agree that:
(a)Mr Kiernan was engaged by Global Trucking as a casual employee from 23 May 2016 to 18 March 2019.[1]
(b)Global Trucking operated and operates a business distributing or relocating by road new or used vehicles required to be driven from one location to another.[2] This work is referred to as “vehicle relocation”.
(c)The business of Global Trucking also includes other operations, including the transportation of single and double road train combinations (both stacked and unstacked) and freight.[3]
(d)The applicant was engaged by Global Trucking to perform vehicle relocation work. [4]
(e)Mr Naismith was, at all relevant times, the sole director, secretary, and shareholder of Global Trucking and was its controlling mind. Mr Naismith had (and has) day to day management and control of Global Trucking.[5]
(f)Prior to 1 July 2018, Mr Kiernan was an award/agreement free employee within the meaning of s 12 of the FW Act.[6]
(g)Prior to 1 July 2018, Global Trucking was required to comply with the National Minimum Wage Order (NMWO) by paying Mr Kiernan the national minimum wage for each hour of work as well as the casual loading as applied to the national minimum wage. [7]
(h)From 1 July 2018, the Road Transport and Distribution Award 2010 (Award) applied to Mr Kiernan’s employment and the business of Global Trucking insofar as it involved vehicle relocation.[8]
[1] SOAF, [1],[8].
[2] SOAF, [4].
[3] SOAF, [5].
[4] SOAF, [7].
[5] SOAF, [6].
[6] SOAF, [9].
[7] SOAF, [10].
[8] SOAF, [11].
During his employment, Global Trucking remunerated Mr Kiernan by the payment of fixed trip rates which were applied without regard to the hours that Mr Kiernan in fact worked. Each of the contraventions arose out of this same incorrect method of payment.[9]
THE UNDERPAYMENTS
[9] SOAF, [31].
The contravention of s 293
Section 293 of the FW Act provides that “an employer must not contravene a term of a national minimum wage order”.
It is agreed that Global Trucking did not pay Mr Kiernan the applicable national minimum wage and casual loading for each hour worked by him during the following periods, each of which was subject to a different NMWO corresponding with the relevant financial year:
·3 May 2016 to 30 June 2016;
·1 July 2016 to 30 June 2017; and
·1 July 2017 to 30 June 2018.
This resulted in an underpayment of $26,226.46.[10]
[10] SOAF, [16].
Global Trucking did not pay superannuation on the amount of $26,226.46. The total amount of the unpaid superannuation was $2,491.52.[11]
[11] SOAF, [17].
The contravention of s 45
Section 45 of the FW Act provides that “a person must not contravene a term of a modern award”.
It is agreed that Global Trucking did not pay Mr Kiernan for the period 1 July 2018 to 18 March 2019 (being the period that the Award applied to Mr Kiernan’s employment) the following Award entitlements:[12]
(1)the minimum hourly rate and casual loading for each hour worked (clauses 15.2 and 19 and 12.5 of the Award);
(2)the applicable Saturday and Sunday loading for each hour worked on Saturdays and Sundays (clause 28.1 of the Award);
(3)the applicable public holiday loading for each hour worked on a public holiday (clause 28.2 of the Award);
(4)the overtime rates for each hour of overtime worked (clauses 12.5, 22.1, 27.1 and 27.3 of the Award);
(5)a travelling allowance for each occasion Mr Kiernan was working and unable to return home at night (clause 16.2(f) of the Award); and
(6)a meal allowance for each occasion when Mr Kiernan was required to work overtime for two continuous hours or more (clauses 26.3 and 16.4(e) of the Award).
[12] SOAF, [18].
Under the Award, Mr Kiernan was entitled to receive the following amounts during the period 1 July 2018 to 18 March 2019:[13]
·the minimum wage and casual loading for time worked by him in the amount of $13,231.52;
·Saturday loadings in the amount of $4,092.04;
·Sunday loadings in the amount of $5,276.20;
·public holiday loading in the amount of $549.90;
·overtime rates in the amount of $21,119.52;
·travelling allowances in the amount of $1,583.00; and
·meal allowances in the amount of $1,338.75.
[13] SOAF, [19].
Mr Kiernan was however only paid an amount of $24,670.00. The total amount of the underpayment was $22,520.03.[14]
[14] SOAF, [20]-[21].
Rectification of underpayment
On 24 May 2023, Global Trucking paid into Mr Kiernan’s personal bank account the sum of $50,846.49 (taxed at the applicable rate), being the total of the underpayment amounts referred to in paragraphs [7] and [12] as well as an amount of $2,100 relating to a breach of contract claim and interest of $2,496.99.
Global Trucking also made a payment on Mr Kiernan’s behalf into its default superannuation account (Australian Super) in the amount of $2,491.52 (at the applicable superannuation rate) being the total amount of unpaid superannuation referred to at [8] above.
Earlier related proceeding
On 4 November 2021 – approximately six months before the present proceeding was commenced – Judge Cameron of this Court handed down his decision in Cooper v Naismith Truck Movers Pty Ltd [2021] FedCFamC2G 221. In that matter, the first respondent (under its old name) was ordered to pay a civil penalty (agreed between the parties) in the amount of $20,000 (where the maximum penalty available was $252,000) for contraventions in respect of another former employee, Mr Cooper.
The contraventions arose out of the same flawed system of payment that was adopted during Mr Naismith’s employment. In that earlier matter, Mr Cooper suffered a loss of $12,003.92 arising from underpayments over nearly a year and a half which had the effect of almost halving his wages.[15] The contravening conduct occurred almost simultaneously with that in the present proceeding. Mr Cooper was employed by Global Trucking from 20 September 2016 to 1 November 2019 whereas Mr Kiernan was employed by Global Trucking from 23 May 2016 to 18 March 2019.
[15] Cooper at [21]
As I will later explain, the parties disagree about the significance of the Cooper proceeding to this case.
PROCEEDINGS IN THIS COURT
These proceedings were commenced on 5 May 2022 by Mr Kiernan filing an Originating Application and Statement of Claim.
On 15 July 2022 the respondents filed a defence.
The parties attended a mediation on 11 August 2022 however the matter did not resolve.
On 30 November 2022, the applicant filed an Amended Statement of Claim as well as three affidavits.
On 17 May 2023 the parties filed the SOAF and on 19 May 2023, orders were made listing the matter for a penalty hearing on 16 November 2023.
When the matter came before me on this date, Mr Kiernan was represented by solicitor advocate Mr Mattson, and both respondents were represented by Mr Garozzo of counsel.
MATERIAL RELIED UPON
In addition to the SOAF, the parties relied on the following material.
For Mr Kiernan:
·Affidavit of Steven Thomas Kiernan sworn 30 November 2022;[16]
·Affidavit of Glenn Raymond Millen sworn 29 November 2022;[17]
·Affidavit of Bruce Andrew Watt sworn 28 November 2022;[18]
·Affidavit of (solicitor) James Bernard Mattson sworn 11 May 2023; and
·Outline of submissions on penalty dated 9 November 2023.
[16] Save for paragraphs 107, 108, 119, 120, 121, 122, 123 and 124 which were either not pressed or ruled out as inadmissible.
[17] Save for paragraphs 14, 15, 16, 17, 18, 22, 24, 25, 40 (first sentence only), 42 (second last sentence only) and 48 which were either not pressed or ruled out as inadmissible.
[18] Save for paragraph 15.
In the case of the first and second respondents:
·Affidavit of (solicitor) Victoria Athanasiou dated 16 June 2023; and
·Outline of submissions on penalty dated 9 November 2023.
None of the deponents of the affidavits were required for cross-examination.
THE LEGISLATIVE FRAMEWORK
The parties each filed comprehensive written submissions which they supplemented with focused oral submissions directed at the areas of intractability.
There was however agreement that the approach to penalty should occur within the following parameters:
First, that under s 546(1) of the FW Act, this Court may, on application, order a person to pay a pecuniary penalty that the Court considers is appropriate if satisfied that the person has contravened a civil penalty provision. Mr Kiernan, as an employee, has standing to make such an application.
Second, that both ss 45 and 293 of the FW Act are civil remedy provisions (see Item 2 of Part 2-1 and Item 8 of Part 2-6 of the table in s 539(2) of the FW Act).
Third, reflecting the position that the maximum pecuniary penalty for a contravention of s 45 or s 293 of the FW Act is 60 penalty units for an individual and 300 penalty units for a corporation (and where it was not suggested that the contraventions met the test for serious contraventions in s 557A of the FW Act), the maximum penalties that could be applied in this case are as follows:
For a contravention by Global Trucking of s 45 or s 293:
·for the period from 23 May 2016 to 30 June 2016 - $54,000;
·for the period from 1 July 2016 to 30 June 2017 - $54,000;
·for the period from 1 July 2017 to 30 June 2018 - $63,000; and
·for the period from 1 July 2018 to 18 March 2019 - $63,000.
For a contravention by Mr Naismith of s 45 or s 293:
·for the period from 23 May 2016 to 30 June 2016 - $10,800;
·for the period from 1 July 2016 to 30 June 2017 - $10,800;
·for the period from 1 July 2017 to 30 June 2018 - $12,600; and
·for the period from 1 July 2018 to 18 March 2019 - $12,600.
Grouping of the contraventions
The orthodox five-step approach to determining penalty was endorsed and summarised by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36] as follows:
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at including by reference to those which may be proposed by [the parties] and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary…
The parties have divergent views as regards the application of steps two and three that concern the grouping of contraventions as well as to the ultimate penalty that should be imposed. These views are best described by reference to the tables produced by the parties that identify their grouping and related penalty proposals.
Mr Kiernan submits that grouping and corresponding penalty should occur for Global Trucking as follows:
Contravention
Maximum penalty
Penalty sought by the Applicant
First Respondent
Minimum wage under NMWO 2015, 2016 and 2017 –
$63,000
$37,800
s 293 of the FW Act
(60%)
Casual loading under NMWO 2015, 2016 and 2017 –
$63,000
$37,800
s 293 of the FW Act
(60%)
Minimum pay and casual loading under the Award –
$63,000
$31,500
s 45 of the FW Act
(50%)
Overtime under the Award –
$63,000
$31,500
s 45 of the FW Act
(50%)
Saturday loading under the Award –
$63,000
$25,200
S 45 of the FW Act
(40%)
Sunday loading under the Award –
$63,000
$25,200
S 45 of the FW Act
(40%)
Public holiday loading under the Award –
$63,000
$12,600
s 45 of the FW Act
(20%)
Travel allowance under the Award –
$63,000
$6,300
s 45 of the FW Act
(10%)
Meal allowance under the Award –
$63,000
$6,300
s 45 of the FW Act
(10%)
Total
$567,000
$214,200
Mr Kiernan submits that it would be appropriate to apply a discount of no more than 10% on account of the first respondent’s cooperation and corrective action (discussed in greater detail below) which would reduce the total penalty to $192,780. There also appeared to be a concession made in Mr Kiernan’s written submissions that application of the “totality principle” would make a penalty of $170,000 “appropriate”.[19]
[19] Applicant’s outline of submissions on penalty at [95].
Mr Kiernan submits that grouping and corresponding penalty should occur for Mr Naismith as follows:
Contravention
Maximum penalty
Penalty sought by the Applicant
Second Respondent
Being involved in contravention of NMWO –
$10,800
$7,560
ss 293 and 550 of the FW Act
(70%)
Being involved in contravention of Award –
$12,600
$8,820
ss 45 and 550 of the FW Act
(70%)
Total
$23,400
$16,380
The grouping set out above is said to involve the following approach:
First, application of the “well-established” principle that where there are contraventions of different terms of a modern award these should be regarded as separate contraventions because each term and the failure to comply with it involves a different species of omission and therefore different conduct (referring to Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62). By analogy, the same logic applies to contraventions of the NMWO (referring to Fair Work Ombudsman v Australian Sales & Promotions Pty Ltd & Anor [2016] FCCA 2804 at [93]). This results in the identification of two contraventions of s 293 of the FW Act – failure to pay the national minimum wage and failure to pay the casual loading.
As far as the Award is concerned, Mr Kiernan identifies eight contraventions – failure to pay minimum pay, casual loading, overtime, weekend loadings (involving separate rates on Saturday and Sunday), public holiday loading, travelling allowance and meal allowance. Mr Kiernan however makes an allowance for minimum pay and casual loading to be grouped together on the basis, it seems, that this is how they are treated in the SOAF. With this concession, the number of contraventions of s 45 of the FW Act is identified as seven.
Second, Mr Kiernan resists any further grouping on an application of the common law “course of conduct” principle notwithstanding the parties’ agreement that “the contraventions arose out of the same incorrect method of payment being the paying of fixed trip rates without regard to the hours worked by the applicant”.[20] Mr Kiernan submits, by reference to Fair Work Ombudsman v Lohr (2018) 356 ALR 424 at [34], that “[t]he fact of flat rates of pay cannot operate to deny the multiplicity of contraventions”.
[20] SOAF, [31]
The respondents addressed the question of grouping in their written submissions by taking the following approach.
First, on an application of s 557(1) of the FW Act, the starting position recognises a single contravention of s 293 of the FW Act and seven individual contraventions of s 45 of the FW Act.
Second, the Court should have regard to whether the individual contraventions are legally and factually interrelated, such as to fall within certain groups and to permit their aggregation. It was said that this course was unobjectionable and recognised in decisions such as NHS North at [36] (sub-paragraph 2) (reproduced at [35] above) and Fair Work Ombudsman v PTES [2023] FCA 934 at [88].
The respondents submitted that each of the contraventions in this case were closely interrelated, both legally and factually, on the basis that each involved a payment owed to Mr Kiernan pursuant to a statutory payment obligation under the FW Act – first under the NMWO, and then under the Award – and that each involved the failure of Global Trucking to meet that obligation because of the application of a trip rate. The respondents submitted that it was appropriate in these circumstances to aggregate each of the eight contraventions into one group to prevent excessive punishment for multiple contraventions arising out of the same conduct. They proposed a penalty in the range of a single medium-level contravention.
The respondents submitted that an alternative way to obtain the same outcome would be to proceed on the basis that the contraventions of s 45 that related to Global Trucking’s failure to pay Mr Kiernan the applicable minimum hourly rates and casual loading, Saturday and Sunday loadings and overtime rates under the Award formed part of the same course of conduct, for the purposes of s 557(1) of the FW Act, by which Global Trucking contravened s 45 for each of those Award terms in the Cooper matter. The respondents referred, in this context, to the decision of Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626 at [32] as an example of a case where the Court applied the statutory course of conduct provision in circumstances where contraventions of the same civil remedy provision affected two separate persons. The rationale being that Global Trucking had already been punished for engaging in essentially the same conduct.
At the hearing of this matter the respondents maintained the submissions referred to above but invited the Court to consider an alternative grouping proposal that was described in an annotated version of Mr Kiernan’s grouping table (set out at [37] above) and handed up without objection. I have marked this document “R-1”.
The effect of the annotated table, which addressed only contraventions engaged in by Global Trucking, was to produce the following grouping and proposed corresponding penalty:
Contravention
Maximum penalty
Penalty sought by the Respondents
First Respondent
Minimum wage under NMWO 2015, 2016 and 2017 (s 293 of the FW Act)
$63,000
$25,200
Minimum pay under the Award (s 45 of the FW Act)
(40%)
Casual loading under NMWO 2015, 2016 and 2017 (s 293 of the FW Act)
$63,000
$6,300
Casual loading under the Award (s 45 of the FW Act)
(10%)
Overtime under the Award (s 45 of the FW Act)
$63,000
$15,750
Weekend loadings under the Award (s 45 of the FW Act)
Public holiday loading under the Award (s 45 of the FW Act)
(25%)
Travel allowance under the Award (s 45 of the FW Act)
$63,000
$6,300
Meal allowance under the Award (s 45 of the FW Act)
(10%)
Total
$252,000
$53,550
The respondents submitted that the alternative form of grouping was defensible and appropriate for the following reasons.
First, as far as the grouping of the minimum wage contraventions under the NMWO and the Award were concerned, this made allowance for the fact that the contraventions had occurred across a time frame that involved the transition from the NMWO to the Award. It was said that, but for the intercession of the Award, the minimum wage breach would be one contravention. The respondents invited the Court to apply the same lens to the conception and grouping of the casual loading contraventions.
Second, the respondents submitted that overtime, weekend loading and public holiday loading each had the character of a penalty payment, such that they were contravened in a similar way by the payment of a flat rate and should be grouped together.
Third, it was said that the travel allowance and the meal allowance possessed a legal and factual relationship that justified their being grouped together as well.
For reasons that will be developed later, the respondents did not deal with the treatment of Mr Naismith’s admitted contraventions, on the basis that no penalty should be applied to him.
Mr Kiernan was critical of the respondents’ alternative grouping proposal and in particular the grouping of the NMWO and Award contraventions together. Mr Kiernan emphasised the separate legal character of the instruments and noted that they were dealt with differently in the FW Act and directed at different ends; the NMWO identifying a minimum standard and doing so through two terms of substance (minimum pay and casual loading).
Mr Kiernan also submitted that historically, courts had been reluctant to group overtime, weekend loading and public holiday loading together as they were concerned with legally distinct entitlements. Mr Kiernan submitted that it was especially problematic to group the overtime contraventions as these in fact involved three distinct breaches including the failure to accommodate 10-hour breaks between shifts in an industry that involved employees engaged in long-distance driving.
Pecuniary penalties
The primary purpose of deterrence was reiterated by the High Court in Australian Building and Construction Commission v Pattinson (2022) 274 CLR 450. In that decision, the majority upheld the Commissioner’s appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with provisions of the FW Act by those responsible and by (like) others. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that “[t]he power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a ‘notion of proportionality’ in a civil penalty regime”.[21] However, the High Court did accept that s 546 requires the Court to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity”.[22] It was only in this more qualified sense that the concept of “proportionality” had any role to play.
[21] Pattinson at [10].
[22] Pattinson at [41].
The High Court in Pattinson also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. The list revealed that both the circumstances of the contravener and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for.[23] However, the Court repeated the caution that the list of possible relevant considerations should not be approached as a “rigid catalogue of matters for attention” and instead the task of the court remains to determine what is an “appropriate” penalty in the circumstances of the particular case.[24]
[23] Pattinson at [57].
[24] Pattinson at [18]-[19].
In Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155, the Full Court (Allsop CJ, White and O’Callaghan JJ) identified the task in the following terms (at 167 [20]-[21]):
Relevant factors in the overall assessment of penalty were helpfully listed by French J in CSR. They have been adopted in many cases. For present purposes, they can be restated as follows: the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.
The seriousness of the contravention and other features of the conduct which may be seen as relevant to it…find their place in understanding the degree of deterrence that is necessary to be reflected in the size of the penalty: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68 at [71].
The parties’ submissions addressed, with different emphasis, the considerations referred to above. To best understand how the arguments were put, it is convenient to first set out the evidence upon which the parties’ relied, noting that none of it was challenged and is liable therefore to be treated, subject to it being inherently incredible or contradicted by facts otherwise established on the evidence[25] as accurate and credible.
[25] Impiombato v BHP Group Limited (No 5) [2024] FCA 591 at [143].
The affidavit evidence of Mr Kiernan
Mr Kiernan was (as of November 2022) 67 years old and described himself as a “career truck driver”. He gave evidence that during his employment with Global Trucking he regularly dealt with and received instructions from Mr Naismith, and it was Mr Naismith who interviewed him for the role of casual truck driver. During that interview, Mr Naismith told Mr Kiernan that “drivers are paid trip rates” and that “our [Global Trucking’s] rates are the best in the industry, and everyone is happy with them”.
Mr Kiernan deposed that during his employment, Mr Naismith performed the following tasks associated with his role:
·allocation of trips;
·organisation of and payment for trip accommodation;
·organisation of and payment for travel to and from customer depots, home, or any other trip location, including by taxi or airplane;
·organisation with customers for vehicle pick-up and delivery locations and times;
·contacting Mr Kiernan to inform him about upcoming trips and trip details;
·setting trip rates and overnight allowance;
·arranging for the reimbursement of any work-related expenses that Mr Kiernan incurred during trips;
·emailing Mr Kiernan payslips.
Mr Kiernan recalled raising issues regarding his pay with Mr Naismith on approximately six occasions across 2018 and 2019. When he told Mr Naismith that he believed he had been underpaid for certain trips, Mr Naismith said to him words to the effect of “Belinda works all that out, talk to Belinda” and “Belinda does the pay stuff”. Mr Kiernan understood that “Belinda” worked in the payroll department of Global Trucking.
Mr Kiernan recalled that on another occasion, Mr Naismith had bragged to him that “I paid someone $400 for a $1200 trip”.
Mr Kiernan gave the following evidence about events that occurred on the afternoon of 10 August 2022. This date was said to be significant because it was the day before the mediation in the proceeding took place.
Mr Kiernan recalled (and produced evidence of) having received two calls from a private number to his mobile phone at 4.29 pm and 4.32 pm.
After Mr Kiernan answered the first call, a male voice that Mr Kiernan recognised as belonging to Mr Naismith, started talking and asked him words to the effect of “did you pick up the mail?”. The caller continued with words to the effect of “I dropped a tape recorder into your letter box. The tape recorder has lots of incriminating evidence against you. If this case goes to Court I will use the tape recording against you. I want to settle for $20,000 at the mediation tomorrow. You and I both stand to lose a lot of money”.
When asked to confirm his identify as “Daryl” [Naismith], the caller said, “you know very well who I am”.
When Mr Kiernan returned home, he checked his mailbox and found a tape recorder wrapped in five sheets of paper towel. At the same time, Mr Kiernan observed a black car that had been parked on the nature strip outside his property in regional Victoria drive away. Mr Kiernan reported these events to the police.
After Mr Kiernan ceased employment with Global Trucking he sought advice from the Fair Work Ombudsman about his underpayment concerns. On the advice of the Ombudsman, Mr Kiernan wrote a letter addressed to Mr Naismith and sent by registered post to the Bayswater Depot of the Global Trucking business on 2 December 2019. The letter identified an underpayment amount of $56,920 plus superannuation and requested that Mr Naismith provide Mr Kiernan with a bank cheque for this amount, as well as copies of payslips for the period 21 May 2017 to 28 March 2019. Mr Kiernan did not receive any response to this letter.
The affidavit evidence of Mr Millen
Mr Millen was employed by Global Trucking between July 2016 and July 2020, first as a casual driver and then as a sales representative and the Queensland Operations Manager. In this last role, Mr Millen regularly dealt with and reported to Mr Naismith.
The evidence of Mr Millen described Mr Naismith as being closely involved in his recruitment, as well as the management of the logistics of his vehicle relocation work.
When Mr Millen transferred to the role of Operations Manager, he received many phone calls from drivers about not being paid for a trip or not being paid enough for a trip. Mr Millen recalled that on one occasion, he spoke with a driver, John, who told him that he had been underpaid $80 for a trip. While Global Trucking later paid John the amount outstanding, it did not pay his co-driver the amount outstanding as he did not raise an issue about his pay. According to Mr Millen, when he raised issues with Mr Naismith about driver pay, he would say to him “fuck’em” and “refer the drivers to me and I will handle all wages and pay complaints”.
In the context of the application of the Award to the Global Trucking business, Mr Millen recalled having conversations with Mr Naismith as follows:
·at the start, soon after 1 July 2018, Mr Naismith would say to Mr Millen “we have two years to assess the Award and then a further year to transition to start paying under the Award”.
·when Mr Millen raised continued complaints with Mr Naismith by drivers about their pay, he would say “I know, fuck’em”.
·in a conversation, Mr Naismith mentioned receiving a letter from Matthew Whitnall of Truck Moves, a competitor, “telling me I need to comply with the Award”. Mr Naismith told Mr Kieran, “It’s rubbish”. He also said, “I engaged a IR professional advisor who advised me that I am not legally or otherwise required to transition to the award for a total of three years”.
Mr Millen deposed to a conversation with Mr Naismith in which Mr Naismith spoke of having recorded conversations between himself and Mr Kiernan in his ute and then proceeded to play one of the voice recordings. In the recording, Mr Millen could hear Mr Kiernan talking to Mr Naismith about his childhood.
The affidavit evidence of Mr Watt
Mr Watt was employed by Global Trucking between August 2017 and July 2019, first as a casual truck driver and then as the Victorian Operations Manager. In this last role, Mr Watt would deal frequently with and report to Mr Naismith.
Mr Watt described Mr Naismith as an involved manager who constantly reviewed and checked his work and who was primarily responsible for managing and resourcing customer requests for the relocation of vehicles.
The affidavit evidence of Mr Mattson
The affidavit of Mr Mattson set out the procedural history of the matter, most of which is described earlier in this judgment.
In addition, the affidavit annexed correspondence from the respondents’ lawyer, Ms Athanasiou of Kennedys dated 2 February 2023.[26] This correspondence referred to the Amended Statement of Claim and evidence served by Mr Kiernan on 30 November 2022 and communicated the respondents’ instructions to make admissions to the contraventions identified in the amended pleading as well as to pay the underpayments to Mr Kiernan.
[26] Affidavit of James Bernard Mattson sworn on 11 May 2023 (Mattson Affidavit), annexure “JM-1”.
The affidavit also annexed a copy of the first respondent’s ASIC company extract obtained by Mr Mattson on 6 March 2023 which recorded, amongst other things, that Global Trucking had, on 31 January 2023 filed an application for voluntary deregistration of a company.[27]
[27] Mattson Affidavit, annexure “JM-2”.
On 6 March 2023, Mr Mattson sent a letter to Kennedys in relation to the application by Global Trucking for voluntary deregistration. The letter[28] requested that Global Trucking promptly withdraw its deregistration and provide confirmation in writing of having done so.
[28] Mattson Affidavit, annexure “JM-4”.
On 7 March 2023, Ms Athanasiou of Kennedys sent Mr Mattson an email[29] in which she communicated her client’s instructions that the application for deregistration had been withdrawn shortly after it was made.
[29] Mattson Affidavit, annexure “JM-5”.
On the same date, Mr Mattson wrote to Ms Athanasiou[30] requesting confirmation of the withdrawal of deregistration. According to Mr Mattson, he is yet to receive a copy of the withdrawal and confirmation of same.
[30] Mattson Affidavit, annexure “JM-6”.
The affidavit evidence of Ms Athanasiou
Ms Athanasiou’s evidence was primarily directed at explaining why the respondents initially gave instructions to her firm to deny the claims identified in Mr Kiernan’s statement of claim filed on 6 May 2022. This was said to reflect the different view taken by the respondents as to the type of work performed by Mr Kiernan; while Mr Kiernan’s claim was premised on him performing only vehicle relocation duties, the respondents took the view that he had also performed some non-vehicle relocation duties (approximately 40%) which had consequences for his award coverage and how his entitlements were to be assessed.
Ms Athanasiou also explained that in her view there had been “fundamental deficiencies” in how Mr Kiernan’s claim had been first pleaded. In particular, the Schedules attached to the statement of claim failed to disclose the amounts paid to Mr Kiernan by Global Trucking and the actual work performed by him during each engagement. Kennedys sent correspondence to Mr Kiernan’s lawyers identifying the claimed deficiencies on 16 June 2022 and 15 August 2022.[31]
[31] Affidavit of Victoria Athanasiou dated 16 June 2023 (Athanasiou Affidavit), annexures “VA-2” and “VA-4”.
On 12 September 2022, Mr Kiernan’s lawyers (Bartier Perry) communicated their client’s preparedness to amend his claim to include the information sought by the respondents and orders were made on 16 September 2022 to facilitate this occurring, as well as for the filing of evidence by all parties.[32]
[32] Athanasiou Affidavit, annexure “VA-6”.
Mr Kiernan filed his amended statement of claim on 30 November 2022 and because it, and the supporting affidavits filed at the same time, pleaded and or identified the amounts paid by Global Trucking and the work that Mr Kiernan performed for the first respondent, the respondents instructed Kennedys to admit the allegations set out in the amended pleading. On 2 February 2023, Kennedys sent a letter to Bartier Perry confirming the respondents’ instructions to make admissions and provided a draft Statement of Agreed Facts and proposed consent orders that would program the matter to penalty hearing.
Ms Athanasiou’s affidavit also annexed correspondence concerning the deregistration process, including that on 6 February 2023, Mr Naismith sought advice from ASIC and his accountant concerning the process for cancellation of the deregistration application of Global Trucking. The cancellation of deregistration was confirmed by ASIC the next day.[33]
[33] Athanasiou Affidavit, annexure “VA-9”.
Ms Athanasiou’s affidavit also annexed an ASIC Historical Company Extract for Global Trucking (extracted on 15 March 2023) which recorded that on 7 March 2023 Mr Naismith ceased in the role of both director and secretary of the first respondent.[34]
Oral and written submissions of the parties
[34] Athanasiou Affidavit, annexure “VA-1”.
Nature and extent of the conduct
Mr Kiernan submitted that the payment method (being a pay per trip method) utilised by Global Trucking was “fundamentally flawed” and designed to avoid paying him correctly for all time he was required to work. Mr Kiernan submitted that the failure to pay the minimum wage and casual loading was especially egregious because as a casual employee, he did not have access to the other entitlements enjoyed by permanent employees. His injury was therefore compounded.
Mr Kiernan submitted, by reference to his own evidence and that of Mr Millen, that Mr Naismith knew about his obligations under the Award and was indifferent as to how it applied to the employees of Global Trucking. Mr Kiernan also made the submission that there was no indication in the evidence (including because the respondents made the decision not to go into evidence) that the underpayment practices would have stopped had Mr Kiernan not ceased employment with Global Trucking.
In oral submissions, counsel for the respondents challenged this last submission, and instead submitted that the Court could only impose a penalty based on the actual contraventions that have been found against the respondents, limited to the period of the contraventions identified in the SOAF. The submission was made that the Court was not able to speculate as to what might have occurred had Mr Kiernan continued in his employment with the first respondent.
The respondents made the submission that Global Trucking is a small business with no dedicated human resources function. It could not be said to have had a history of contraventions of the FW Act given that the contravening conduct in this matter had occurred across a period that was almost entirely co-extensive with the period over which the conduct that was the subject of the Cooper judgment had occurred. There was no evidence of subsequent or ongoing contraventions of the FW Act by the respondents.
As far as this last submission was concerned, Mr Kiernan identified a need for circumspection in circumstances where there was no evidence from the respondents of steps taken to rectify other underpayments or to educate themselves about their legal obligations in the wake of the Cooper and this proceeding.
Nature and extent of any loss or damage
The total amount of the underpayment was over $50,000. Mr Kiernan characterised this as a significant underpayment, particularly for an “older worker”[35] and, by reference to PTES, a “damning figure”. Mr Kiernan observed that in Cooper, the underpayment was in the amount of $12,300 which had been described as “not insignificant”.[36]
[35] Cooper at [14].
[36] Cooper at [14].
Mr Kiernan submitted that the admitted contraventions involved a profound disregard by the respondents for their most basic obligations under the FW Act which produced significant financial consequences for him. This was illustrated in a series of tables appearing in Mr Kiernan’s written submissions which showed that during the period that the NMWO applied to his employment, Mr Kiernan was paid an amount of $72,866 when instead he should have been paid the amount of $99,092.46 and during the period that the Award applied to his employment, Mr Kiernan was paid an amount of $24,670 when instead he should have been paid the amount of $47,125.69.[37]
[37] Applicant’s outline of submissions on penalty at [44].
Similar previous conduct
Mr Kiernan acknowledged that at the time that Global Trucking engaged in the conduct that gave rise to the contraventions in his case, Global Trucking did not have any convictions for contraventions of the FW Act. However, Mr Kiernan resisted the suggestion that the judgment and imposition of penalties in Cooper should be understood as cutting across the need to impose a penalty in this case because (according to the respondents) they had already been penalised and would be unlikely to contravene the FW Act again.
Mr Kiernan submitted that such an approach would not sufficiently recognise the fact that Cooper was uniquely concerned with the situation of one employee and would fail to account for the following distinguishing features of his case which he submitted produced a more serious set of contraventions:
First, Mr Kiernan’s underpayment (including superannuation and contractual entitlements) was significantly higher than that of Mr Cooper.
Second, Mr Kiernan’s case involved additional contraventions of the NMWOs and other Award clauses.
Third, after the Cooper decision, no prompt steps were taken by the respondents to rectify Mr Kiernan’s underpayment which inaction required him to commence these proceedings. Viewed in this light, it could be said that the respondents had continued to offend.
Size of the company
Global Trucking is an Australian proprietary company limited by shares that employs other drivers, including semi-retired drivers. In Cooper, Judge Cameron observed (at [21]) that “it has not been suggested that the size of the business provided some explanation of the company’s payment practices”. Mr Kiernan submitted that where no evidence had been given in these proceedings by the respondents the same information gap existed.
The respondents conceded that the height of the evidence in this regard was that Global Trucking is a small business and that the second respondent is the sole director and shareholder of that small business.[38] It was submitted that the Court should not apply the same standard or set of expectations to the first respondent as it would to a larger and/or more sophisticated organisation with greater resources and thereby enhanced capacity to implement proper systems and processes.
[38] Transcript pg 23 line 19-21
Deliberateness of the breaches
Under this consideration, Mr Kiernan emphasised that there was no evidence from Mr Naismith or any officer or manager of Global Trucking that explained the conduct that gave rise to the underpayment.
Mr Kiernan made the further submission that the Court should find that the respondents had been aware that the NMWOs applied to his employment prior to 1 July 2018 and that the Award applied from 1 July 2018. This was because the coverage of the vehicle distribution and relocation industry by the Award from 1 July 2018 onwards was widely publicised within the industry and because the applicant’s unchallenged evidence was that he had raised issues with his pay to Mr Naismith approximately six times in 2018 and 2019.
Mr Kiernan submitted that although the respondents claimed to have paid trip rates to him of the kind that were contained in the Road Transport (Long Distance Operations) Award 2020 (the RTLDA),[39] there was in fact no evidence as to why the trip rate method had been applied or whether it bore any relationship to the RTLDA, which, in any case, was a different modern award to that which applied to the work performed by Mr Kiernan.
[39] Respondents’ outline of submissions on penalty at [24].
Mr Kiernan also relied on the unchallenged evidence of Mr Millen (reproduced at [75] above) to support a submission that the respondents simply ignored their obligations under the Award.
Involvement of senior management
Mr Kiernan submitted this was a consideration that applied in his case because it was Mr Naismith, the sole director, secretary, and shareholder of the first respondent, who at relevant times, was responsible for setting the trip rates payable to drivers, giving directions to and supervising drivers, and allocating and organising the logistics of trips, including organising, and paying for accommodation and incidental travel.
The respondents submitted that the Court should be circumspect about recognising this consideration as an aggravating factor in circumstances where the first respondent is a small business and structured, in effect, as a “one-man show”. Viewed in this light, the involvement of Mr Naismith was not surprising and should not greatly aggravate the culpability of the respondents.
Contrition, corrective action, and cooperation
Mr Kiernan submitted that there was no evidence of contrition, which ought to weigh heavily in the determination of penalties.
In oral submissions, counsel for the respondents accepted there was an absence of evidence on this point. However, he submitted that the failure of Mr Naismith to give evidence (of contrition, or more broadly, at all) in this case, was justified (or explained) in circumstances where there was an allegation of what was essentially criminal conduct made against him. It was submitted that to the extent that the decision not to give evidence impacted the Court’s ability to award a discount, it should not otherwise operate as a substantial aggravating factor against the respondents.
Mr Kiernan acknowledged that there was cooperation and corrective action on the part of the respondents but submitted that this had occurred late and in circumstances where these proceedings had been already initiated and substantial evidence on liability had been filed by the applicant.
The respondents challenged this submission and invited the Court to find instead that admissions had been made at an early stage in the proceeding and would likely have been made earlier had it not been for the deficiencies in the applicant’s first statement of claim.
Deterrence
Addressing the topic of deterrence, Mr Kiernan submitted that there was a need to send a message to employers generally in the vehicle relocation industry that contraventions of workplace laws is a matter that warrants censure.
Mr Kiernan submitted that in the case of Mr Naismith the following considerations meant that there was a need for specific deterrence.
First, he was, at relevant times, the sole director, secretary, and operator of Global Trucking.
Second, he continues to be the owner and operator of Global Trucking.
Third, he has responsibility for paying employees.
Fourth, he has demonstrated a lack of contrition in these proceedings which was borne out by the fact that Mr Kiernan had been required to commence and then maintain these proceedings, even after he had received a call from Mr Naismith telling him that he would settle the proceeding at mediation.
The respondents, on the other hand, submitted that there was only a moderate need to generally, or specifically, deter future like contraventions of the FW Act. The respondents invited the Court to proceed on the basis that they had already been punished by the penalty imposed in the Cooper judgment in which case the presiding judge (Judge Cameron) had expressly considered that a penalty of $20,000 was appropriate to deter future contraventions of the FW Act, “whether by the respondents or by others”.[40]
[40] Cooper at [23].
The respondents submitted that given the exposure that the respondents’ contravening conduct has received, by way of the Cooper decision and the present proceeding, and the risk of future proceedings and civil penalties being imposed, the Court should be satisfied that it was unlikely that the respondents would contravene the FW Act again.
Treatment of Mr Naismith
As noted earlier, the respondents – through an application of the “totality principle” – submitted that in recognition of Mr Naismith’s position as sole owner of the first respondent (which it described as "in effect, a corporate emanation of him”), any penalty imposed on the corporate respondent would be effectively imposed on him and that the Court should refrain from imposing any personal penalties on Mr Naismith or alternatively, make adjustments to the amount of any separate penalties to avoid double punishment.
Mr Kiernan submitted that such an approach should not be entertained for the following reasons.
First, there was no evidence of either respondent’s financial position or the impact an order to pay a pecuniary penalty would have on either of them.
Second, a similar argument to that promoted by the respondents was rejected in NHS North where, at [160], after recording the arguments deployed against it by the Ombudsman, Bromwich J said:
In the circumstances of this case, the weight that should be attached to the relationship between New Shanghai Charlestown and Mr Chen should be limited. If persons such as Mr Chen choose to avail themselves of the advantages of a corporate structure, which includes such things as limited liability, asset protection and tax advantages, there is a limit to which they can then seek to rely upon the disadvantages of that structure, in circumstances where it has been the primary vehicle by which they have engaged in serious contraventions of workplace laws. In all the circumstances, the appropriate course is therefore to take into account the relationship between Mr Chen and New Shanghai Charlestown, but for it to have a limited effect on the ultimate penalty to be imposed…
Third, the scheme in the FW Act quite deliberately distinguishes between the employing corporation and those individuals who are found liable under s 550(1) of the FW Act and makes provision for a (much) larger penalty to be applied to the former category of contravener. It would make a mockery of the scheme established by parliament and fail to promote deterrence, should the Court refrain from imposing a penalty on Mr Naismith.
CONSIDERATION
The broad discretion of the Court to make orders for the payment of a pecuniary penalty as considered appropriate must be exercised judicially. However, that is not to say that the Court is to be bound by the proposal of one or other party or by the outcome in a related proceeding (here, the Cooper judgment). Instead, the primary objective of the fixing of penalties remains steadfastly on the need for deterrence.
Before approaching this question, it is necessary to say something about the grouping of the contraventions in this case. The primary approach to grouping identified by the respondents has little to commend it. It involves too simplistic and reductive a view of the different, multiple, contraventions committed by the first respondent and the distinct entitlements (secured by distinct industrial instruments) to which they are directed. The parties’ agreement that the contraventions arose out of the same incorrect method of paying a fixed trip rate provides a flimsy foundation for a proposal that would involve the Court assessing penalty on the basis that there had been a single, rather than agreed eight, contraventions. There is simply insufficient information before the Court to arrive at a view that the multiple contraventions possessed a legal and factual interrelationship that would justify their aggregation to the extent suggested by the respondents.
Furthermore, the approach adopted by the respondents does not find support in any of the cases to which the Court was taken in submissions. I note that in both PTES and in NHS North, the grouping accepted by the presiding judge recognised the distinct character of the contraventions. In PTES, this recognition occurred notwithstanding the failures to comply with different payment obligations could be attributed to a payment methodology that involved a fixed hourly rate. Payment of a flat fee – whether it be an hourly rate or a trip rate – can hide a multitude of sins.
I am also not persuaded that it would be appropriate to apply s 557(1) of the FW Act so that the contravening conduct in this case, insofar as it concerns breaches of the Award, is seen as an extension of the conduct that was the subject of the Cooper proceeding. I accept that in appropriate circumstances, s 557(1) might apply to the multiple contravention of the one term of a modern award, even where the contravention affects two or more people. However, the same lack of information about the circumstances of the “conduct” – both in this case and in Cooper - means that I cannot be satisfied (as is required by s 557(1)(b)) that the contraventions affecting Mr Cooper and Mr Kiernan arose out of a course of conduct by the first respondent. It is not sufficient in my opinion, that the parties in Cooper agreed (and this was reflected in the judgment) that Mr Cooper was paid fixed rates for regular interstate routes and various trip rates for driving irregular interstate routes.[41]
[41] Cooper at [12(b)].
The respondents’ alternative proposal more closely approaches what I consider to be an appropriate grouping in the circumstances of this case. However, there are aspects that involve overreach. I accept Mr Kiernan’s submission that the separate status and objectives of the NMWO and the Award mean that it would be inappropriate to group the minimum wage and pay entitlements and the casual loading entitlements under these instruments together. I also consider there is a need to give separate recognition to the overtime contraventions of the Award, noting that there are in fact three ways in which the entitlement to overtime is recognised under the Award (and was not observed in this case).
I am otherwise satisfied that it is appropriate to group the weekend penalty contraventions together, and the travel and meal allowances together in recognition of the fact that they possess similar characteristics. The result is that I will assess penalty for Global Trucking (step four) in respect of the each of the following individual and groups of contraventions:
·Failure to pay minimum wage under the NMWO (2015, 2016, 2017).
·Failure to pay casual loading under the NMWO (2015, 2016, 2017).
·Failure to pay minimum pay and casual loading under the Award.
·Failure to pay overtime under the Award.
·Failure to pay Saturday and Sunday loading under the Award.
·Failure to pay public holiday loading under the Award.
·Failure to pay meal and travel allowance under the Award.
As far as Mr Naismith is concerned, the applicant’s grouping proposal is on one view quite generous. Arguably, it would have been open for Mr Kiernan to seek the imposition of penalties on Mr Naismith reflecting his involvement in each of the separate contraventions (or groups of contraventions) engaged in by Global Trucking, rather than seeking a penalty in respect of a single contravention of s 45 and s 293 of the FW Act. There was evidence before the Court that Mr Naismith’s involvement transcended the approval of trip rates for Mr Kiernan and extended into most facets of his employment. The parties agreed that Mr Naismith was the controlling mind of the first respondent and that at relevant times, he had day to day management and control of the company. Although it was not expressly pleaded, it might be said that a case plainly emerged that Mr Naismith, by dint of his integral role within the first respondent, assumed responsibility for ensuring that Global Trucking complied with each of its obligations under the NMWOs and the Award and each failure to do so involved a discrete omission on his part. Where Mr Kiernan does not however press for this construction, I will proceed instead on the basis that there were two contraventions by Mr Naismith.
Penalties to be imposed on Global Trucking
The circumstances of the contraventions have been rehearsed above. They crystalise in the following picture that has informed my approach to penalties.
Mr Kiernan was underpaid the amount of $48,746.49 (excluding the contractual claim) over a period of just less than three years. The underpayment, expressed as a proportion of his income over this time was 33.34% and more exaggerated during the Award period, when he received just over 50% of the wages owed to him. It was significant and made worse by the fact that Mr Kiernan is a vulnerable worker by reason of his age and his status as a casual employee. A further consequence of the contraventions was that Mr Kiernan did not receive his full statutory entitlement to superannuation contributions.
While the first respondent did ultimately make rectification of the underpayment amount (plus interest and superannuation contributions), it is noteworthy that this occurred within the following temporal parameters:
·More than four years after Mr Kiernan ceased employment with Global Trucking;
·18 months after the Cooper decision; and
·One year after this proceeding was commenced.
The respondents appeared to suggest that there was uncertainty as to the amount of the underpayment and it was only after Mr Kiernan satisfactorily identified the work performed for and the amounts paid to him by the first respondent that it was able to verify the figure identified by Mr Kiernan. However, I find this explanation unconvincing. The first respondent, including by reason of its record-keeping obligations, should always have been in a position to perform its own calculation as to the amount of the underpayment.
I accept the unchallenged and uncontradicted evidence of Mr Kiernan and of Mr Millen that the spectre of underpayment had been brought to the attention of the first respondent (through Mr Naismith) by Mr Kiernan and other workers. The only evidence before the Court is to the effect that these complaints were either ignored or dealt with in an ad hoc manner.
There is no evidence before the Court that is instructive of efforts made by the first respondent to educate itself about its obligations under the FW Act, either at or around the time that complaints were being made, at the point of transition from the NMWO regime to the Award, in the aftermath of the Cooper decision and/or as a response to this proceeding.
There is no evidence before the Court about the systems (if any) now in place within the first respondent and how or if they operate to secure the first respondent’s compliance with its industrial obligations. In this last respect, the situation of the first respondent stands apart from that considered in PTES (a case that Mr Kiernan relies on as a point of comparison). There was evidence in that case that audit processes were established and maintained to ensure that Award non-compliance would not repeat, and Snaden J took this into account as an indication of contrition.[42]
[42] PTES at [84].
The respondents sought to explain their silence by reference to the character of the allegations directed at Mr Naismith. However, it is not apparent to me why evidence of operational matters could not have been given by someone other than Mr Naismith. Furthermore, as far as Mr Naismith is concerned, he could of course have given evidence in this proceeding willingly and sought a certificate under s 128 of the Evidence Act 1995 (Cth) (Evidence Act) which would have protected him against his own evidence, and any evidence obtained as a direct or indirect consequence of his having given evidence, being used against him in any proceeding in an Australian court. No such application was made.
The parties agree that the first respondent is a small business and I accept the information offered by the first respondent that it operates without a dedicated human resources function. However, where the respondents have produced no evidence about the financial circumstances of Global Trucking or evidence about its organisation and operation more generally, little falls to be extrapolated from these concessions. On one hypothesis, the first respondent is a profitable and well-resourced business whose decision not to have a dedicated human resources function speaks only to its priorities. The point is that the limited information before me does not meaningfully contribute to an understanding of the environment in which the contraventions took place or operate to exculpate the first respondent.
The parties also agree, and I accept, that neither respondent had any prior contraventions of the FW Act with the contraventions in the Cooper proceeding having occurred over roughly the same period as the contraventions admitted in this case.
Turning then to the individual contraventions and what would suffice to deter their repetition into the future. I consider that in each category of contravention, there is a need to give effect to the objects of general and specific deterrence.
As far as general deterrence is concerned, this proceeding provides a further opportunity to communicate a message to employers operating in the vehicle relocation industry that contraventions of workplace laws affecting pay are taken seriously, reflecting the grave injury that they cause to affected workers and the power imbalance that invariably attends the relationship of employer and employee. The need for general deterrence is not diminished by the fact of the earlier Cooper proceeding. The characteristics of the two cases are not uniform. The breadth and impact of the contraventions in this case are more profound and operate across two industrial instruments. Furthermore, prospective contraveners should be alive to the necessity to take prompt remedial action, a feature that is absent in this case, notwithstanding the earlier proceeding, which should have operated as a “wake-up call”.
Insofar as concerns the failure of Global Trucking to pay Mr Kiernan the minimum wage under the prevailing NMWO, the applicant proposes a penalty of 60% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty of 40% for both minimum payment contraventions. I consider that an appropriate response to the contravention is to fix a penalty at 55% of the (undiscounted) maximum. The failure to pay the minimum wage under the NMWO had significant financial consequences for Mr Kiernan and occurred in circumstances where the first respondent proceeded with disregard for its obligations, there being no evidence of any steps taken to understand how the industrial framework applied to its operations and instead evidence that the first respondent had been alerted to the prospect that its payment regime was unlawful.
The same indifference has characterised this proceeding and leads me to conclude that, despite the Cooper proceeding, there is a continued need for specific deterrence in this case. I am not persuaded that salutary lessons have been learned from the earlier proceeding, in circumstances where the first respondent has offered nothing in the way of a statement of contrition and left the Court entirely unilluminated as to how it proposes to discharge its obligations under the FW Act going forward given that the first respondent remains in the business of employing staff within the vehicle relocation industry.
Insofar as concerns the failure of Global Trucking to pay Mr Kiernan the casual loading under the prevailing NMWO, the applicant proposes a penalty of 60% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty of 10% for both casual loading contraventions.
I consider that the penalty proposed by the respondents does not adequately reflect the gravity of the contravention, both in terms of its impact on Mr Kiernan and in terms of the mischief to which the underlying provisions are directed. The payment of a casual loading recognises the inherent vulnerability of workers who have this less certain employment status and a failure to pay the loading grossly undermines the security of this form of employment. The same considerations that informed my decision about the minimum wage apply here as far as specific deterrence is concerned. I consider that the appropriate response to this contravention is to fix a penalty of 60% of the (undiscounted) maximum.
Turning then to the failure of the first respondent to pay Mr Kiernan the minimum hourly rate and casual loading under the Award, the applicant proposes a penalty of 50% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty of 40% for both minimum payment contraventions.
I consider that the proposal of the applicant represents an appropriate response to these contraventions. As noted earlier, the underpayments that occurred during the Award period accounted for more than 50% of Mr Kiernan’s wage and allowance entitlements and they occurred in circumstances where, the evidence reveals, the first respondent (through Mr Naismith) was on notice that the industrial landscape was shifting. The underpayment was either deliberate or at best, the product of wilful blindness and bore no correlation to a decision to pay trip rates compatible with the Road Transport (Long Distance Operations) Award 2010. There is simply no evidence as to the latter.
The need for deterrence looms large. Participants of the vehicle relocation industry are now bound by the Award and must remain vigilant to the obligations that flow as a result. The need for specific deterrence is also obvious where (as noted earlier) there is no evidence before the Court from which I could reasonably infer that the first respondent has taken steps to prevent a repetition of its offending practices or that it has a mind-set that disposes it to do so. While common sense would suggest that the fact of an earlier proceeding would give an employer pause before embarking on further transgressions, that is not the test. Actions invariably speak louder than words.
Insofar as concerns the failure of Global Trucking to pay Mr Kiernan overtime under the Award, the applicant proposes a penalty of 50% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty of 25% of the maximum for the collection of overtime, weekend, and public holiday loading contraventions.
I consider that a penalty fixed in the amount of 50% of the maximum is an appropriate response to this contravention. While the precise underpayment attributable to the failure to pay overtime has not been provided, I infer, based on the agreed facts contained in [19] of the SOAF, that the underpayment for overtime was especially significant. Further, there is a particular case for sending a strong message to participants in the vehicle relocation industry, as well as to the first respondent, that failure to compensate for overtime in an environment that involves long-distance travel, is entirely unacceptable.
Turning then to the failure of Global Trucking to pay Mr Kiernan weekend loadings (Saturday and Sunday) under the Award, the applicant proposes a penalty of 40% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty of 25% of the maximum (for a group of contraventions that includes overtime, weekend, and public holiday loadings).
I consider that a penalty fixed in the amount of 30% of the maximum is an appropriate response to this contravention. The failure of the first respondent to comply with this obligation had serious financial ramifications for Mr Kiernan and cut across the measures put in place to compensate employees for work done outside the “mainstream” hours. I note however that a contravention of the same kind was one of those considered in the Cooper proceeding and therefore informed (in part) the penalty imposed in that case.
As far as the failure of Global Trucking to pay Mr Kiernan public holiday loading under the Award is concerned, the applicant proposes a penalty of 20% of the maximum (discounted by 10% for cooperation) whereas the respondents propose (on their alternative grouping proposal) a maximum penalty representing 25% of the maximum (albeit for a group of three contraventions).
The failure to pay public holiday loading had only a modest impact on Mr Kiernan’s bottom line and although it involved the denial of an important entitlement, in the context of this case the need for deterrence is at the lower end of the spectrum. I consider that a penalty fixed in the amount of 15% of the maximum is an appropriate response to this contravention.
Turning finally to the failure of Global Trucking to pay Mr Kiernan travel and meal allowance both the applicant and the respondents (on their alternative grouping proposal) propose a maximum penalty of 10% of the maximum amount prescribed under the FW Act. I consider this to be an appropriate response to this transgression given its place in the overall scheme of underpayments.
The findings as to penalty can be expressed in table form as follows:
Contraventions(s)
Penalty as proportion of maximum
Penalty amount in $
Minimum wage under NMWO 2015, 2016 and 2017 – s 293 of the FW Act
55%
$34,650
Casual loading under NMWO 2015, 2016 and 2017 – s 293 of the FW Act
60%
$37,800
Minimum pay and casual loading under the Award – s 45 of the FW Act
50%
$31,500
Overtime under the Award – s 45 of the FW Act
50%
$31,500
Weekend loadings under the Award – s 45 of the FW Act
30%
$18,900
Public holiday loading under the Award – s 45 of the FW Act
15%
$9,450
Meal and travel allowance under the Award – s 45 of the FW Act)
10%
$6,300
Total
$170,100
This is not the end of the matter. I accept that in this case there is a proper basis to apply a discount of 10% in recognition of the fact that by making admissions and thereby dispensing with the need for a contested hearing on liability, the first respondent demonstrated a level of cooperation. This means that the figure of $170,100 becomes $153,090.
I have separately turned my mind to whether in the circumstances of this case, the “totality principle” has further work to do in effecting a reduction in the penalties to be levied on the first respondent. A global penalty in the amount of $153,090 is significant. However, whether it will operate oppressively on the first respondent is impossible to tell given the dearth of information about its financial situation. The only parameter that I can apply therefore is whether the penalty is proportionate to the totality of the first respondent’s offending. I consider that it is. No further adjustment will therefore be made to the final amount. I will order that the first respondent pay the amount of $153,090 to the applicant within 28 days.
Penalties to be imposed on Mr Naismith
As noted earlier, Mr Kiernan submits that a penalty representing 70% of the (lower prevailing) maximum for a contravention of s 293 of the FW Act and 70% of the maximum penalty for a contravention of s 45 of the FW Act should be levied against Mr Naismith.
The respondents offer no penalty proposal for Mr Naismith because they submit that he will be sufficiently punished by the imposition of a penalty on the first respondent given his close relationship to this entity.
The first point to note about the respondents’ submission is that it frames the issue of penalty through the lens of punishment. While a penalty that operates oppressively and disproportionately to the end to which it is directed might take on punitive characteristics, this is a question to be confronted as step five of the assessment, under the rubric of the “totality principle”. The anterior question (answered at step four) is whether there is a need to impose a penalty on Mr Naismith to achieve the primary purpose of deterrence.
I consider the answer to this question to be “yes”.
I accept that the object of general deterrence is best achieved through the penalties imposed on the first respondent who, as employer, assumes the multiple obligations under the NMWO and the Award. I have however made a modest allowance for the need for general deterrence, directed at persons who might occupy a like position to Mr Naismith, in the assessment of penalty.
Here, the more compelling need is directed at specific deterrence. Although Mr Naismith no longer occupies the role of director and secretary of the first respondent it is agreed, and the case was argued on the basis that, he continues to have day to day management and control of the first respondent, which, I noted earlier, continues to trade, and employ staff.
The only evidence before the Court from which a picture of Mr Naismith might emerge was supplied by Mr Kiernan. The evidence portrays Mr Naismith as integral to the decisions made by the first respondent including those that concerned the terms and conditions of Mr Kiernan (and other workers’) employment and cavalier in his attitude as to whether these decisions satisfied the first respondent’s obligations under the FW Act.
The evidence also concerns events that post-date Mr Kiernan’s employment, including an allegation (described at [66]-[70] above) that Mr Naismith caused a tape recording to be placed in Mr Kiernan’s letter box just prior to mediation.
The respondents submitted that the Court should approach the question of proof concerning this allegation having regard to the gravity of the matters alleged, as given statutory effect by s 140(2)(c) of the Evidence Act. The respondents noted in this context that the decision of Morley v Australian Securities and Investments Commission (2010) 274 ALR 205 spoke of the need for the tribunal of fact to reach “an affirmative conclusion, or a definition conclusion, or an actual persuasion” and that this reflected the cogency of the evidence adduced before it.[43] The respondents also submitted that even if the Court was to find that the event occurred as described it was of dubious significance; penalties are not intended to be imposed on a person simply because a view is taken that they are a bad person.
[43] Morley at [753].
In approaching my assessment of the evidence, including that which concerns the “tape-recorder allegation” I have borne firmly in mind the seriousness of the matters alleged against Mr Naismith. I am satisfied on the strength of Mr Kiernan’s account (which was cogent and not challenged) that the events he described did in fact take place.
As I noted earlier, Mr Naismith could have given evidence under cover of a certificate issued under s 128 of the Evidence Act but instead adopted silence as his response to the allegations. Had it been necessary to do so, I would have inferred from his failure to give evidence on matters related to his conduct that he would not have been able to give evidence to contradict, undermine or put a different complexion on, the facts relied upon by Mr Kiernan.
The conduct that I have found occurred of course reflects poorly on Mr Naismith. As far as this proceeding is concerned it is relevant because it provides some insight as to Mr Naismith’s attitude to the contraventions. Instead of acknowledging any form of wrong-doing, Mr Naismith chose underhand means to threaten and incentivise Mr Kiernan to approach the resolution of his case, other than on its merits. This demonstrates a lack of contrition as well as a disdain for the rights that underpin the proceeding. The evidence reinforces my view that a penalty with sufficient sting is necessary to deter Mr Naismith from engaging in like conduct in the future, whether through the vehicle of the first respondent, or otherwise. The penalties proposed by Mr Kiernan ($16,380 in total) give effect to this object and are appropriate in the circumstances.
Mr Kiernan did not offer, and I do not consider that any discount is warranted on account of Mr Naismith’s cooperation. This has been recognised already in respect of the first respondent.
I do however consider it necessary to make some adjustment to reflect the “totality principle”. While it is the case that no financial information was produced to allow me to assess the impact on Mr Naismith of penalties being applied to the first respondent and to himself, I remain alive to the reality that there is an interrelationship between both respondents that has the potential to transform a proportionate response to one that is oppressive. Doing the best that I can, I consider that an adjustment of 10% to the penalty described above is appropriate.
Mr Naismith will be required to pay, within 28 days, a penalty in the amount of $14,742 to the applicant.
Declaratory relief
The SOAF records the parties’ agreement that declarations, in a form proposed, should be made in this case.
In his written submissions, Mr Kiernan suggested that there was utility in making declarations because it had been agreed by the parties, and because it was said to serve an important public utility of identifying clearly the undesirability of non-compliance with industrial instruments.
The respondents in oral submission retreated somewhat from the position recorded in the SOAF and submitted instead that cases such as PTES questioned the necessity for declarations in cases where the contraventions had been agreed and where the penalty spoke for itself.
I am not persuaded that there is a need in this case to make declarations. The undesirability of non-compliance with industrial instruments is communicated in the plain language of the imposition of pecuniary penalties and for the reasons that are recorded in this judgment. I do not consider that the making of declarations that adopt the language of lawyers, will enhance or widen the reach of the message already delivered in unequivocal terms. I decline to grant declaratory relief.
I certify that the preceding one hundred and eighty-two (182) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 19 July 2024
0
13
7