LarnÉ-Jones v Human Synergistics Australia Limited
[2016] FCCA 368
•25 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LARNÉ-JONES v HUMAN SYNERGISTICS AUSTRALIA LIMITED & ORS | [2016] FCCA 368 |
| Catchwords: COSTS – Fair Work Act 2009 – penalties – relevant factors – Long Service Leave Act 1955 – whether court can impose a penalty – whether penalties should be paid to the Applicant. |
| Legislation: Constitution Act 1902 (NSW), s.39 |
| Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 Toll v Global Market Insite Inc. [2015] FCCA 105 |
| Applicant: | MARGHERITA LARNÉ-JONES |
| First Respondent: | HUMAN SYNERGISTICS AUSTRALIA LIMITED |
| Second Respondent: | SHAUN MCCARTHY |
| Third Respondent: | MICHAEL GOURLEY |
| File Number: | SYG 2736 of 2011 |
| Judgment of: | Judge Barnes |
| Hearing date: | 11 August 2015 |
| Date of Last Submission: | 1 September 2015 |
| Delivered at: | Sydney |
| Delivered on: | 25 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Meehan |
| Solicitors for the Applicant: | Kemp Strang |
| Counsel for the Respondent: | Ms K Nomchong SC |
| Solicitors for the Respondent: | FCB Workplace Law |
ORDERS
Under s.546(1) of the Fair Work Act 2009 (Cth) the First Respondent pay a penalty of $5,000 in respect of its contravention of s.44 of the Act.
Under s.546(1) of the Fair Work Act 2009 (Cth) the Second Respondent pay a penalty of $500 in respect of his contravention of s.44 of the Act.
Under s.546(1) of the Fair Work Act 2009 (Cth) the Third Respondent pay a penalty of $500 in respect of his contravention of s.44 of the Act.
Under s.546(3)(c) of the Fair Work Act 2009 (Cth) each of the penalties referred to in Orders 1, 2 and 3 be paid to the Applicant within 28 days of these orders being made.
Under s.10 of the Long Service Leave Act 1955 (NSW) the First Respondent pay a penalty of $300 in respect of its contravention of the Long Service Leave Act.
The penalty referred to in Order 5 be paid to the Consolidated Fund of the State of New South Wales within 28 days of these orders being made.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2736 of 2011
| MARGHERITA LARNÉ-JONES |
Applicant
And
| HUMAN SYNERGISTICS AUSTRALIA LIMITED |
First Respondent
| SHAUN MCCARTHY |
Second Respondent
| MICHAEL GOURLEY |
Third Respondent
REASONS FOR JUDGMENT
In Larné-Jones v Human Synergistics Australia Limited & Ors [2015] FCCA 968 (Larné-Jones v HSA [2015]) I found that by terminating the Applicant’s employment without giving her notice or payment in lieu of notice the First Respondent, Human Synergistics Australia Pty Ltd (HSA) failed to comply with s.117(2) of the Fair Work Act 2009 (Cth) (the FWA) and that this amounted to a contravention of s.44(1) of the FWA which is a civil remedy provision. In addition, I found that each of the Second and Third Respondents was involved in the contravention and hence was taken to have contravened s.44 of the FWA.
In addition, I found that by failing to pay Ms Larné-Jones her long service leave entitlement upon termination of her employment, HSA contravened s.4(5) of the Long Service Leave Act 1955 (NSW) (the LSL Act).
This judgment relates to the application for penalties in respect of the contraventions by each Respondent of s.44 of the FWA. In addition, in the course of the hearing on penalty, the Applicant also sought an order imposing a penalty on HSA pursuant to s.10(1) of the LSL Act as had been foreshadowed in pre-hearing written submissions. In post-hearing submissions the parties accepted that this court had jurisdiction to impose a penalty under the LSL Act and addressed the issue of the appropriate recipient of such penalty.
The FWA contravention consisted of non-payment in lieu of notice on termination of Ms Larné-Jones’ employment on 22 September 2011. According to the Respondents, Ms Larné-Jones’ employment was terminated for serious misconduct. However the Respondents did not seek to establish in these proceedings that she in fact engaged in misconduct justifying summary dismissal. Hence they were unable to rely on s.123(1)(b) of the FWA which provides that Division 11 of Part 2-2 of the FWA, which includes s.117, does not apply to an employee whose employment is terminated because of serious misconduct.
HSA also failed to pay Ms Larné-Jones in respect of any long service leave entitlement on termination of her employment, but did not seek to establish that her services were terminated for serious and wilful misconduct within s.4(2)(a)(iii) of the LSL Act.
On or about 16 August 2012 HSA sent Ms Larné-Jones’ solicitors a cheque representing payment in lieu of five weeks notice in accordance with s.117 of the FWA and in respect of accrued long service leave together with the interest thereon calculated from the date of termination (albeit without any admission as to liability). In October 2012 the amount due to Ms Larné-Jones was adjusted to correct a calculation error and a fresh cheque provided.
The Fair Work Act contravention
The court has power under s.546 of the FWA to order a person to pay a pecuniary penalty that the court considers appropriate if satisfied that the person has contravened a civil remedy provision. At the time of the FWA contraventions in issue, the maximum penalty that could be imposed on the First Respondent as a body corporate was the sum of $33,000 (see ss.12 and 546(2) of the FWA and s.4AA of the Crimes Act 1914 (Cth) as it stood at the relevant time). For natural persons, such as the Second and Third Respondents, the maximum penalty for a contravention of the FWA under s.546(2)(a) of the FWA was $6,600 each.
Section 546(3) of the FWA provides that the court may order that the penalty or part of the penalty be paid to:
a) the Commonwealth; or
b) a particular organisation; or
c) a particular person
The FWA does not give explicit guidance about the circumstances in which a penalty under s.546 will be appropriate or suggest criteria or factors the court might take into account in determining the appropriate level of any such penalty. It is well-established that the court has a broad discretion and that it must have regard to the individual circumstances of the case. It is not fettered by any checklist of mandatory criteria (see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 at [12], [86], [87] and [91].) The task has been described as one of “instinctive synthesis” (ibid, at [27] and [55]). The court is to have regard to the need to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations (ibid at [91] per Buchanan J).
Considerations that may be relevant have been conveniently summarised in various cases (see for example Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 and Mason v Harrington Corporation Pty Ltd (trading as Pangaea Restaurant and Bar) [2007] FMCA 7). However such lists of factors do not prescribe or restrict the matters to be taken into account in the exercise of the court’s discretion (Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550). Considerations which may be relevant in a particular case include matters such as the nature and extent of the conduct which led to the breaches; the circumstances in which that conduct took place; the nature and extent of any loss or damage sustained as a result of the breaches; whether there was any similar previous conduct by a respondent; whether the breaches were properly distinct or arose out of one course of conduct; the size of the business enterprise involved; whether or not the breaches were deliberate; whether senior management was involved; whether the party committing the breach has exhibited contrition; whether the respondent has taken corrective action and/or cooperated with enforcement authorities; the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and the need for specific and general deterrence (see Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61; [2008] FCA 1426 at [40] per Tracey J and Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509 at [15] – [16]).
As Gilmour J pointed out in Fair Work Ombudsman v AJR Nominees Pty Ltd (No. 2) [2014] FCA 128 at [10], the courts now regard contraventions of industrial laws more seriously than was generally the case in the past. In Fair Work Ombudsman vA Dalley Holdings Pty Ltd Bromberg J stated at [19] that:
In imposing a penalty, it is imperative for the court to impose a penalty that reinforces the fundamental importance of compliance with the safety net of entitlements specified by the National Employment Standards and the general protection provisions of the FW Act.
It has also been suggested that the historical increase in the maximum penalties for contraventions of the FWA indicates a legislative desire to deter and discourage such conduct, consistent with the need to recognise the significance of general deterrence in determining the applicable penalty (see Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467; [2005] FCA 1847 at [60] and [72]).
I have considered the circumstances of this case in light of these principles.
The nature and extent of the conduct and the circumstances in which it occurred
As detailed at some length in Larné-Jones v HSA [2015], the contravention of the FWA was a single contravention, being a failure to give notice of termination or a payment in lieu of five weeks notice on termination of Ms Larné-Jones’ employment in September 2011. The decision to dismiss the Applicant without notice was made by the Second and Third Respondents on behalf of HSA as the result of a chain of events, including an extensive investigation into allegations against her of bullying and harassment of former and current HSA employees. After such investigation, HSA afforded Ms Larné-Jones the opportunity to respond to the allegations. She was given the opportunity to attend meetings to discuss disciplinary action. The Second and Third Respondents, on behalf of the First Respondent, made the decision to dismiss Ms Larné-Jones summarily on the basis that they were each of the view that she had engaged in serious misconduct such as to warrant summary dismissal.
There has been no judicial determination as to whether or not Ms Larné-Jones in fact engaged in serious misconduct. She was dismissed summarily on 22 September 2011 in circumstances which meant that she received no payment in lieu of notice or accrued long service leave. She commenced proceedings in this court on 30 November 2011. She claimed that she was dismissed in contravention of a general protection provision of the FWA. In essence she asserted that her employment was terminated for the reason or reasons that included the reason that she had exercised a workplace right to make a claim under the Workers Compensation Act 1987 (NSW) contrary to s.340 of the FWA and/or because she had a mental disability for the purposes of s.351 of the FWA. In addition, she claimed that there had been a contravention of s.44 of the FWA through the failure to comply with s.117 of the Act. She also claimed that there had been breaches of implied terms in her contract of employment. In a Statement of Claim filed on 25 June 2012 Ms Larné-Jones detailed the basis of her claim that in order to lawfully terminate her employment on the termination date HSA was required to give her a period of five weeks written notice or payment in lieu thereof pursuant to s.117 of the FWA and made a claim under the LSL Act.
As indicated, on 16 August 2012 the First Respondent sent the Applicant a cheque for an amount that included an amount payable on termination with notice together with interest thereon (deducting an agreed overpayment). The Applicant returned the cheque. The parties’ solicitors corresponded about a miscalculation of the amount relating to accrued long service leave. A further cheque was sent on 12 October 2012 which the Applicant failed to present.
In the meantime, on 20 August 2012 the Respondents filed an Amended Response and a Defence in which it was pleaded that on 16 August 2012 HSA had:
…without admission of liability and in order to avoid prolonged litigation, determined to meet the Applicant’s claim by treating the termination of the Employment Agreement as if done by payment in lieu of notice...
It was pleaded that the payment in lieu of notice had been calculated in accordance with the contract of employment between Ms Larné-Jones and HSA and included an additional week’s payment in lieu of the notice of termination of employment as required under s.117(2)(b) and s.117(3)(b) of the FWA as well as payment of accrued and untaken long service leave payable pursuant to s.4 of the LSL Act.
The Second and Third Respondents (directors of HSA) gave evidence in the substantive proceedings in relation to the reason they decided to meet Ms Larné-Jones’ notice claim after she commenced proceedings (notwithstanding their view that she had engaged in serious and wilful misconduct such as to warrant summary dismissal). In essence, it was indicated that they had chosen not to adduce evidence about the bullying and harassment allegations on the basis that to do so would have required a considerable number of HSA employees and former employees to give evidence (up to 23 witnesses). Clearly this would have involved considerable additional hearing time and attendant costs. However I have also borne in mind that the allegation of misconduct has not been proven.
The Applicant contended that the circumstances leading up to the termination of her employment indicated that the directors had made a considered and deliberate decision. It was submitted that the evidence that each of the directors had remained open, to some extent, to the possibility that had she provided an explanation or apology, termination with notice may have been appropriate, demonstrated that the decision to terminate her employment without notice was a deliberate choice which was not conclusively informed by whether the matters relied on to dismiss her were proven or capable of proof. It was submitted that the Respondents had “unilaterally and unlawfully” decided to dismiss the Applicant without notice and hence that the court should conclude that the contraventions of s.117 were serious and deliberate.
The decision to dismiss Ms Larné-Jones was intentional and in that sense deliberate. Both Mr McCarthy and Mr Gourley were of the view, once the investigation into the allegations had been conducted, that it was appropriate to bring her employment to an end (see Larné-Jones v HSA [2015] at [180]). She was given the opportunity to respond to the allegations. She was also afforded the opportunity to attend various scheduled meetings to discuss disciplinary action. This did not occur, through a combination of ill health on the Applicant’s part and an ultimate indication through her solicitors that she did not intend to attend a meeting with the directors in relation to her employment.
The fact that this process allowed for the possibility that Ms Larné-Jones may have provided an explanation such as to persuade the directors that termination with notice was appropriate does not detract from the fact that both directors were of the view on the material before them that Ms Larné-Jones’ conduct amounted to serious misconduct warranting summary dismissal.
Further, as detailed in Larné-Jones v HSA [2015], on all the evidence I was satisfied that Mr McCarthy’s and Mr Gourley’s expressed reasons for the termination of Ms Larné-Jones employment were their actual reasons and were based solely on their respective beliefs that Ms Larné-Jones had engaged in bullying and harassment of other employees and ex-employees of HSA and that any return by her to work at HSA was untenable because of the effect it would have on other staff and on the business. I was satisfied in those circumstances that HSA had met the onus imposed by s.361 of the FWA to prove that the dismissal was not for reasons that included her mental disability or workers’ compensation rights or the exercise of such rights. In that context HSA was not required to prove that there was otherwise a legitimate basis for the dismissal (see Larné-Jones v HSA [2015] at [81] and Khiani v Australian Bureau of Statistics [2011] FCAFC 109 at [35]-[36]). The claims of adverse action under ss.340 and 351 of the Act were not made out.
However, as indicated, the Respondents did not seek to establish in these proceedings that the Applicant in fact engaged in serious misconduct such as to enliven the exception to the s.117 obligation under s.123(1)(b) of the FWA or to entitle HSA to rely on the exception to the obligation to pay long service leave in circumstances where an employee’s services were terminated for serious and wilful misconduct (see s.4(2)(a)(iii) of the LSL Act). This had the consequence that the obligations to give notice or a payment in lieu of notice pursuant to s.117 of the FWA (as well as under the contract of employment) and to forthwith pay Ms Larné-Jones accrued long service leave on termination were applicable. Further, the payment to Ms Larné-Jones in August 2012 was made without admission of liability.
Despite the payment in August 2012, Ms Larné-Jones maintained her application in relation to these matters, seeking payment, declarations and penalties in relation to contraventions of s.44 of the FWA and also under the LSL Act.
As submitted for the Respondents, these are unusual, albeit not unique, circumstances. In Ratnayake v Greenwood Manor Pty Ltd [2012] FMCA 350 the applicant was summarily dismissed on the grounds of alleged serious misconduct following allegations of bullying by various members of staff. In contrast to the position in this case, in Ratnayake the court considered whether it had been established that the applicant had in fact engaged in serious misconduct in circumstances where the allegation of bullying had been effectively abandoned (see Ratnayake at [101] and Ratnayake v Greenwood Manor Pty Ltd (No. 2) [2012] FMCA 440 at [15]) and fellow staff members were not called to give evidence. It did not accept on the evidence before it that serious misconduct had been established. However, as in this case, Riley FM accepted that the decision-maker genuinely believed the truth of the allegations and on that basis believed he had the right to dismiss the applicant without notice (Ratnayake (No. 2) at [17]-[19]).
The Respondents drew attention to the fact that in Ratnayake the unusual circumstances were found to warrant a modest penalty. Such argument was said to be stronger in this case given that Ms Larné-Jones was not simply dismissed following allegations of bullying and harassment, but was suspended on full pay pending a full investigation into the allegations, had the opportunity to respond to the allegations, and the fact that it was only after the directors received the investigation report that they decided to terminate her employment. It was also pointed out that the Applicant was then given the opportunity to attend meetings to discuss disciplinary action to be imposed but (ultimately) declined to do so.
As the Respondents submitted, the decision to dismiss Ms Larné-Jones marked the end of a formal and comprehensive process. It was not a hastily made decision and both directors held a genuine belief in the truth of the allegations, on the basis of the report and also their own inquiries.
Ms Larné-Jones made a claim in relation to s.117 of the FWA in her original application filed on 30 November 2011 (albeit this aspect of the claim was not fully particularised until the Statement of Claim in which the LSL Act claim was raised for the first time). Thereafter the Respondents determined to meet these aspects of the claim, but liability was not admitted. While this aspect of the claim was a minor part of the Applicant’s case, it was open to her to seek the imposition of penalties and in that context it was necessary for her to establish liability. Moreover a contravention of s.44 involves a failure to comply with the “safety net” of National Employment Standards (including s.117) (see Fair Work Ombudsman v A Dalley Holdings Pty Ltd at [19]).
It was not until closing submissions in the substantive proceedings that the Respondents acknowledged that s.117 of the FWA required that a payment in lieu of notice had to be made at the time of termination (given that HSA had not sought to establish that Ms Larné-Jones had engaged in serious misconduct). It was conceded that the evidence disclosed that the Second and Third Respondents were involved in the decision making of HSA such as to be involved in the contravention of s.44 in the sense provided for in s.550 of the FWA.
I have had regard to the whole of the circumstances and the context in which the failure to meet statutory obligations to make a payment in lieu of notice and to pay accrued long service leave occurred in assessing the nature and extent of the conduct. The circumstances are unusual. The Respondents, while of the genuine belief that the Applicant had engaged in serious misconduct, chose not to seek to prove actual misconduct in the substantive proceedings. HSA met its obligation in respect of payment in lieu of notice (and long service leave) after the Statement of Claim was filed. However liability in that respect was not admitted until closing submissions.
The nature and extent of any loss or damage sustained as a result of the contraventions
At the time of the termination of her employment Ms Larné-Jones suffered loss in that she did not receive a payment in lieu of notice (or her accrued long service leave). She did not receive such payments until after she had commenced these proceedings and filed her Statement of Claim (from which it was apparent that these claims formed only a minor aspect of the proceedings). However, as and from October 2012, when the accurately calculated amount to which she was entitled, including interest, was paid to her, any loss arising from the contravention of s.117 of the FWA (or the LSL Act breach) had been met.
Ms Larné-Jones declined to present the October 2012 cheque and did not ultimately do so until prior to the hearing of the substantive matter. The Respondents cannot be held liable for her action in that respect. The Applicant was fully recompensed in late 2012. However there was a period during which she did not receive her entitlements, albeit as a consequence of the Respondents’ belief that she had engaged in serious misconduct.
On the other hand, contrary to the Respondents’ submission, the decision in Mendonca v Chan & Naylor (Parramatta) Pty Ltd & Anor [2014] FCCA 1042 provides very little support for the proposition that in circumstances where there has been no loss or damage to an Applicant caused by any action of the Respondents no pecuniary penalty should be imposed.
In Mendonca the evidence before the court was such as to enable Judge Cameron to consider and determine the issue of whether there was serious misconduct. His Honour found that the applicant’s conduct amounted to serious misconduct and in those circumstances concluded that the respondent had discharged its onus under s.361 in the general protections part of the proceeding.
Relevantly, his Honour also concluded that because the applicant in that case was shown to be guilty of serious misconduct, he had not made out his claim for payment of an amount in lieu of notice (see s.123 of the FWA) or a LSL Act claim. The same cannot be said in this case as no determination was made as to whether Ms Larné-Jones in fact engaged in serious misconduct.
Similar previous conduct
There is no suggestion of any similar previous conduct of any Respondent on the evidence before the court. The First Respondent has been operating since 1991. The Respondents have no prior offences under the FWA (or the LSL Act).
Size of the business enterprise and the role of the decision-makers
HSA is a relatively small business in Australia, with offices in Sydney and Melbourne. As at 2011 it employed approximately 15 people. The Second and Third Respondents are the directors and shareholders of the First Respondent. As the relevant decision-makers they were involved in the contraventions.
Distinct contraventions or one course of conduct
There was only one failure to comply with s.117 of the FWA. The contraventions of the FWA and of the LSL Act were distinct in nature, albeit both were failures to afford the Applicant statutory benefits to which she was entitled in the absence of proof of serious misconduct warranting summary dismissal.
Whether the contravention was deliberate
As discussed above in relation to the nature and extent of the contraventions, the deliberate failure to pay Ms Larné-Jones an amount in lieu of notice (or accrued long service leave) on termination of her employment was “intentional” but is to be seen in the context of the directors’ genuine belief that Ms Larné-Jones had engaged in serious misconduct warranting summary dismissal and the process leading up to the dismissal discussed in Larné-Jones v HSA [2015] at [25]-[62].
Co-operation
Unsurprisingly, given that they consistently maintain that they genuinely held the belief that the Applicant had bullied and harassed colleagues and was thus guilty of gross misconduct, the Respondents have not expressed remorse for their conduct. This is understandable and I accepted that they held this belief. I have also had regard to the fact that the Respondents determined to meet the Applicant’s claim in relation to notice in August 2012. They did so without admission of liability. Had they sought to rely on the exceptions to liability under s.117 of the FWA and s.4 of the LSL Act, it would have been necessary to establish that the Applicant had in fact engaged in serious misconduct. Substantial additional time, cost, and expense would have been required had it been necessary to determine in the hearing whether the Applicant in fact engaged in serious misconduct. Other employees would have had to give evidence about the allegations. Nonetheless, this forensic choice is not such as to be deserving of a discount in penalty in the same manner as an early admission of liability and an acceptance of responsibility for a contravention.
General and specific deterrence
The issue of deterrence was considered by Lander J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65 at [93]. As his Honour stated:
There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
In this case (as in Ratnayake), having regard to the particular and unusual circumstances which led to the contraventions of the FWA (and the LSL Act) and my satisfaction that the expressed reasons for termination of Ms Larné-Jones’ employment on the basis of serious misconduct reflected the genuine beliefs of the Respondents, there is little need for specific deterrence to address any risk of reoffending. The absence of any expression of contrition to be seen in light of the particular and unusual circumstances.
General deterrence requires an appropriate penalty to act as a deterrent to others who might be likely to offend. It is appropriate to have regard to the general proposition that employees should be afforded their entitlements under the National Employment Standards to notice or payment in lieu of notice. While there is some need for general deterrence, it requires only a relatively modest penalty given the unusual facts and the circumstances in which this aspect of the claim arose and was met.
Conclusion
There are differing, and to some extent conflicting, features of this case. However, as Gilmour J pointed out in Fair Work Ombudsman v AJR Nominees Pty Ltd (No. 2) at [9] “[p]roportionality to the gravity of the contravention and consistency commonly operate as final checks on the penalty assessed” (also see Australian Ophthalmic Supplies at [54] per Graham J). The unusual factual matrix in which these contraventions occurred and the circumstances in which the Applicant’s claim in this respect was met (albeit not “within weeks of her commencing the proceedings” as the Respondents submitted) are factors which, having regard to all the circumstances, satisfy me that while penalties are appropriate for each Respondent in relation to the failure to meet the National Safety Net obligation to give notice or a payment in lieu thereof at the time of the termination (particularly in the interests of general deterrence) they should be at the lower end of the range.
I would assess the appropriate penalty for HSA for contravention of s.44 of the FWA at $5,000.
The Respondents urged that no penalty should be imposed on either of the Second or Third Respondents on the basis that while the decision in relation to the termination of Ms Larné-Jones’ employment was their combined decision, it was also their decision to pay her notice and long service claim in August 2012 and there was no difference in the conduct of the First Respondent as regards the breach to that of the Second and Third Respondents.
I am not persuaded that it is appropriate that no penalty be imposed on the Second or Third Respondents, as the decision-makers, but consider that the appropriate penalty to be imposed on each of the Second and Third Respondents in relation to their contraventions of s.44(1) of the FWA is the sum of $500 each.
In the ordinary course of events, the court must fix a penalty that is appropriate for each individual contravention by a respondent and then consider whether the aggregate is appropriate for the total contravening conduct in accordance with the totality principle which is designed to ensure that the aggregate of penalties is not oppressive or crushing.
There was one FWA contravention by HSA in which each of the Second and Third Respondents was involved. No issue of a course of conduct arises (see Fair Work Ombudsman v AJR Nominees Pty Ltd (No. 2) at [66]). No authority was cited in relation to whether the totality principle is applicable to contraventions of two different statutory regimes. In any event, in the particular circumstances of this case, it is not necessary to consider this issue further, because I am of the view that the penalties which ought to be imposed are, when considered as an aggregate, appropriate for the total contravening conduct.
The Long Service Leave Act
As to the contravention of the LSL Act, the Applicant sought only that a penalty be imposed on the First Respondent. The maximum penalty that could be imposed is 20 penalty units, which, under s.17 the Crime (Sentencing Procedure) Act 1999 (NSW) amounted to $2,200 at the relevant time.
The parties were of the view that this court not only has jurisdiction to make declarations under the LSL Act (see Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 at [68], per Gleeson CJ, Gaudron and Gummow JJ, and s.18 of the Federal Circuit Court of Australia Act1999 (Cth) (FCCA Act)) but also to determine an application for the imposition of a penalty under the LSL Act (notwithstanding the wording of s.10 of the LSL Act).
In particular, the First Respondent did not demur from the Applicant’s contention that the determination of her claims under the FWA involved the exercise of federal jurisdiction in the sense considered in Edensor at [54] (and see Wilczak v Alpine Refrigeration & Air Conditioning Pty Limited [2004] FCA 1356 at [40]), and that once federal jurisdiction existed it extended to the whole of the controversy of which the federal claim formed a part, even if certain claims forming part of such a single matter would not otherwise fall within federal jurisdiction (see Phillip Morris Inc. & Anor v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7; Re Wakim; Ex parte McNally (1999) 198 CLR 511; [1999] HCA 27 at 583-586 [125]-[141] per Gummow and Hayne JJ; and Qantas Airways Limited v Lustig (2015) 228 FCR 148; [2015] FCA 253 at [60] per Perry J).
Once the jurisdiction of the court has been invoked, it is empowered under s.14 of the FCCA Act to grant all remedies to which the relevant party appears to be entitled, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and multiplicity of proceedings concerning any of those matters avoided.
In Kassis v Republic of Lebanon (2014) 282 FLR 408; [2014] FCCA 155 Judge Raphael proceeded on the basis that this court has jurisdiction to make findings of contravention of the LSL Act and also to impose a penalty under s.10 of that Act.
Similarly, Judge Cameron stated in Mendonca, at [47]:
Although this court is not amongst the courts referred to in the Long Service Leave Act, that is no impediment to the court exercising accrued jurisdiction in relation to the long service leave aspect of this matter: Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206 at 210.
(Also see Toll v Global Market Insite Inc. [2015] FCCA 105 at [74] per Judge Cameron).
The long service leave claim forms part of the justiciable controversy between the parties as to the rights of the Applicant consequent upon the termination of her employment. I am not satisfied that the approach in Kassis, Mendonca and Toll is clearly wrong. Having regard to this and to the submissions of each of the parties, I accept that this court may impose a penalty in respect of a contravention of the LSL Act.
In my view, having regard to all of the factors outlined above, including the maximum penalty provided for under the LSL Act, the appropriate penalty to be imposed on HSA for the contravention of that legislation is also at the low end of the scale. I would impose a penalty of $300.
To whom should the penalties be paid?
That leaves for consideration the Applicant’s contention that the court should order that the penalties imposed under the FWA and LSL Act should be paid to her. In support of this proposition it was contended that the “usual” order under the FWA was that any pecuniary penalty ordered payable by the court would ordinarily be paid to the party prosecuting the proceedings (see Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No. 5) [2013] FCA 1384 at [25] per Collier J). In Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170 at [44] Gray J suggested that the view that the initiating party was normally the proper recipient of a penalty recognised particular interests in certain classes of persons “in upholding the integrity of awards and agreements the subject of penal proceedings”. In this case the proceedings can be seen as serving the public interest in deterring non-compliance with the National Employment Standards. There has been some difference of opinion in decisions of single judges of the Federal Court in relation to the appropriateness of such an order under the FWA (see for example the discussion of this issue by Branson and Lander JJ in Plancor) but now see Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4.
Section 546(3)(c) of the FWA expressly permits the court to order that a pecuniary penalty be paid to a person (rather than to the Commonwealth). Ms Larné-Jones brought the proceedings as a person affected by the contravention of s.44 of the FWA (see s.351(1) of the FWA), albeit that these contraventions formed only a small part of her action, which focused on general protections and contractual claims. I am not satisfied that the fact this part of the claim was a minor part of the application means that the penalty ought not to be paid to the Applicant.
I have borne in mind that s.546(3)(c) should not be seen as a backdoor method of securing costs which are not normally recoverable under the FWA (see Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118; [2013] FCA 1146 per Jessup J at [118]). However, penalties may be paid to an applicant to reflect the time, expense (apart from legal costs) and trouble that must have been incurred in pursuing a civil penalty application under the FWA (see Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216, Branson and Lander JJ at [64]-[65] and Gray J at [39]-[45] in Plancor and Murrihy). While not quantified, it is apparent that some time and expense of this nature must have been incurred by the Applicant.
Given the nature of the s.117 obligation, the fact that the Applicant pursued the application for a penalty in respect of such a provision despite the payment in lieu of notice after she had commenced the proceedings, does not mean that it is inappropriate that any penalty should be paid to her.
Having regard to these matters (and the extent of the penalties) I consider that the penalties under the FWA should be paid to the Applicant.
However I am not persuaded that in the exercise of its jurisdiction to resolve the LSL claim, s.14 of the FCCA Act empowers the court to order that any penalty under the LSL Act be payable to the Applicant. The fact that the court’s accrued jurisdiction is relied upon to provide jurisdiction to make orders under the LSL Act does not mean that the court can depart from the powers set down in the LSL Act. The court cannot invoke the provisions of s.546(3) of the FWA in this context as s.10(1) of the LSL Act is not a civil remedy provision.
A penalty under New South Wales legislation such as the LSL Act would, under s.39(1) of the Constitution Act 1902 (NSW), be payable to the Consolidated Fund of the State of New South Wales. There is no suggestion that there is any provision in the LSL Act equivalent to s.536(3) of the FWA giving power to a court to make orders directing that any penalty ordered pursuant to s.10(1) of the LSL Act be payable to any other person or entity.
The penalty under the LSL Act should be paid to the Consolidated Fund of the State of New South Wales.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Date: 25 February 2016
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