Lees v Asaleo Personal Care Pty Ltd (No 2)
[2022] FedCFamC2G 264
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
Lees v Asaleo Personal Care Pty Ltd (No 2) [2022] FedCFamC2G 264
File number(s): MLG 2194 of 2020 Judgment of: JUDGE RILEY Date of judgment: 13 April 2022 Catchwords: INDUSTRIAL LAW – court having found that the respondent took adverse action against the applicant for prohibited reasons – compensation – penalties – damages – interest. Legislation: Fair Work Act 2009 ss.340(1), 545 (1) and (2)(b), 546(1), and 557 Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Nine Brisbane Sites Appeal) (2019) 269 FCR 262; (2019) 366 ALR 698; (2019) 286 IR 336; [2019] FCAFC 59
Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526; (2011) 205 IR 392; [2011] FCA 333
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8
Collison v Brighton Road Enterprises Pty Ltd (t/a The Grosvenor Hotel and Anor) (No 2) [2016] FCCA 1798
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46
Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364
Fair Work Ombudsman v Bedington [2012] FMCA 1133
Ho v Ngo [2021] FedCFamC2G 127
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Stuart Lees v Asaleo Personal Care Pty Ltd [2021] FedCFamC2G 347
Division Division 2 General Federal Law Number of paragraphs: 61 Date of hearing: 4 March 2022 Place: Melbourne Counsel for the applicant: Rohan Millar Solicitor for the applicant: McDonald Murholme Solicitors Counsel for the respondent: Leigh Howard Solicitor for the respondent: Clayton Utz ORDERS
MLG 2194 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: STUART LEES
ApplicantAND: ASALEO PERSONAL CARE PTY LTD (ACN 005 442 375)
Respondent
ORDER MADE BY:
JUDGE RILEY
DATE OF ORDER:
13 APRIL 2022
THE COURT ORDERS BY CONSENT THAT:
1.Pursuant to ss.545(1) and (2)(b) of the Fair Work Act 2009 (“the Act”), the respondent pay to the applicant compensation in the amount of $22,552.80 for economic loss in respect of his dismissal on 11 March 2020 in contravention of s.340(1) of the Act.
2.Pursuant to ss.545(1) and (2)(b) of the Act, the respondent pay to the applicant $2,002.44 for interest on the amount of compensation specified in order 1.
THE COURT ORDERS THAT:
3.Pursuant to ss.545(1) and (2)(b) of the Act, the respondent pay to the applicant compensation in the amount of $7,500.00 for non-economic loss in respect of his dismissal on 11 March 2020 in contravention of s.340(1) of the Act.
4.Pursuant to ss.545(1) and (2)(b) of the Act, the respondent pay to the applicant $666.82 for interest on the amount of compensation specified in order 3.
5.Pursuant to s.546(1) of the Act, the respondent pay to the applicant a pecuniary penalty of $22,050 in respect of the presentation to the applicant of a performance improvement plan on 3 March 2020 in contravention of s.340(1) of the Act.
6.Pursuant to s.546(1) of the Act, the respondent pay to the applicant a pecuniary penalty of $44,100 in respect of the dismissal of the applicant from his employment on 11 March 2020 in contravention of s.340(1) of the Act.
7.Within 28 days, the respondent pay to the applicant the amounts required by these orders to be paid.
Note:The form of the order is subject to the entry in the court’s records.
Note:This copy of the court’s reasons for judgment may be subject to review 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 RILEY:
INTRODUCTION
This is an application for compensation, penalties, damages and interest following the making of certain declarations in an adverse action claim brought under the Fair Work Act 2009 (“the Act”). In Stuart Lees v Asaleo Personal Care Pty Ltd [2021] FedCFamC2G 347, the court made the following declarations:
1.The respondent contravened s.340 of the Fair Work Act 2009 (“the Act”), by taking adverse action against the applicant for a prohibited reason by:
a.presenting to him a performance improvement plan on 3 March 2020; and;
b.dismissing him from his employment on 11 March 2020.
2.The respondent breached its contract of employment with the applicant by not conducting formal annual performance reviews after August 2016.
MATERIAL RELIED UPON
The applicant relied upon:
(a)his affidavit sworn on 22 April 2021;
(b)his written submissions filed on 28 January 2022;
(c)the letter dated 2 February 2022 from Dr Papa to the applicant’s solicitors (exhibit 1).
The respondent relied upon:
(a)the affidavit affirmed by Paul Honey on 17 June 2021;
(b)the affidavit affirmed by David Elliston on 17 June 2021;
(c)its written submissions filed on 21 February 2022; and
(d)the email chain regarding Dr Papa’s letter (exhibit 2).
COMPENSATION
a. economic loss
The parties were in agreement that, consequent upon the adverse action, the applicant had suffered economic loss of $22,552.80. The respondent consented to an order that it pay that amount to the applicant, together with interest on that amount calculated in accordance with Federal Court Practice Note CM16. That practice note has been revoked and replaced by the Interest on Judgments Practice Note (GPN-INT) which is relevantly the same. There will be orders accordingly.
b. non-economic loss
The applicant claimed compensation for non-economic loss as well, in a sum of at least $20,000. The respondent opposed any order for non-economic loss.
The applicant said at paragraph 33 of his affidavit sworn on 22 April 2021 that:
My dismissal has also had a severe impact on my mental health and wellbeing. Around the time of my dismissal, I attended an appointment with my general practitioner to seek medical advice in relation to symptoms of sleeplessness, increased irritability and withdrawing from social situations.
The applicant’s solicitor sought a medical report from the applicant’s general practitioner. The request was sent by email dated 28 January 2022 (exhibit 2) and was as follows:
We request a report on Stuart Lees stating:
1.The regularity of his visits
2.That he was unwell
3.That the unwellness related to his treatment at work.
Our client’s agreement to release the report to us is attached. We should be grateful if this could be attended to as a matter of priority, with the document sent directly to us.
The doctor’s reply (exhibit 1) was dated 2 February 2022 and was as follows:
I am writing in response to your email dated 28 January 2022 titled ‘Stuart Lees Medical Report’.
1.
Our first electronic record of Mr Lees’ attendance to the clinic is dated 26 August 2006. There are fifty doctor appointments since that time entered into the electronic record. Mr Lees’ first appointment with me was on 8 July 2019. He has consulted with me on ten occasions since, with his most recent appointment dated 29 November 2021.
2 and 3.
On 11 November 2019, Mr Lees consulted with me and reported being bullied at work over the previous six months. He reported symptoms of sleep disturbance and ruminating thoughts about his work situation as a result of being bullied. He reported concern about being forced out of his job. I recommended referral to a psychologist privately or through an Employee Assistance Program for further management.
The doctor was not made available for cross-examination, but the applicant was.
Under cross-examination, the applicant agreed that, on 11 November 2019, he was participating in his anti-bullying application to the Fair Work Commission and there was an independent investigator investigating his complaints. The applicant also agreed that he was not dismissed until four months later, in March 2020.
The applicant could not say whether he had an appointment with his general practitioner in or around March 2020, or whether any such appointment related to his treatment at work. The applicant agreed that his general practitioner would have a complete record of his attendances. The general practitioner’s letter did not say that the applicant had attended upon him in or around March 2020 for ‘unwellness’ related to his treatment at work. That was even though the solicitor’s letter to the general practitioner had expressly asked for that information.
In these circumstances, the medical evidence does not support the applicant’s claims. Nevertheless, the applicant argued in his submissions filed on 26 October 2021 that medical evidence was unnecessary to make out the claim. The applicant relied on the decision of Judge Jones in Collison v Brighton Road Enterprises Pty Ltd (No. 2) [2016] FCCA 1798 at [58] where her Honour said:
It is not necessary that there be before the Court expert medical evidence for a Court to find that an Applicant has suffered distress, anxiety or other symptoms as a consequence of contraventions engaged in by a Respondent.
The applicant also relied on Ho v Ngo [2021] FedCFamC2G 127 at [31] where Judge Burchardt made an order, in the absence of medical evidence, for compensation for hurt and humiliation consequent upon adverse action. His Honour referred to Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526; (2011) 205 IR 392; [2011] FCA 333 at [438] - [450], where the Federal Court held that it had power, in the absence of medical evidence, to order compensation for distress, hurt or humiliation.
The respondent argued that, even if there had been medical evidence, an appropriate sum for non-economic loss, based on similar cases, would be in the order of $5,000 to $7,500.
I follow the cases mentioned above and accept that I can make an order for compensation for non-economic loss in the circumstances of this case. I have concerns about whether the applicant attended upon Dr Papa at around the time of his dismissal for sleeplessness, irritability and withdrawing from social situations for the express reason of his treatment at work. However, the applicant was not cross-examined on whether he actually suffered those symptoms at the time of his dismissal from work. I accept that he did. I consider that it is proper that he be compensated for those symptoms.
In my view, and consistently with similar cases, I consider that compensation for non-economic loss in the sum of $7,500 would be appropriate in this case. There will be an order accordingly.
PENALTY
The applicant sought a penalty for each of the two contraventions identified by the court. The parties agreed that the maximum penalty for a corporation is $63,000 for each contravention.
The applicant submitted that the penalties for each contravention should be a figure towards the maximum penalty. The respondent submitted that the penalty for the presentation of the performance improvement plan should be $10,000, and the penalty for the dismissal should be $20,000.
APPROACH TO DETERMINING PENALTY
Bromwich J summarised the proper approach to determining penalty in cases such as this in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [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 FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, 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: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(a)The nature and extent of the conduct which led to the breaches.
(b)The circumstances in which that conduct took place.
(c)The nature and extent of any loss or damage sustained as a result of the breaches.
(d)Whether there had been similar previous conduct by the respondent.
(e)Whether the breaches were properly distinct or arose out of the one course of conduct.
(f)The size of the business enterprise involved.
(g)Whether or not the breaches were deliberate.
(h)Whether senior management was involved in the breaches.
(i)Whether the party committing the breach had exhibited contrition.
(j)Whether the party committing the breach had taken corrective action.
(k)Whether the party committing the breach had cooperated with the enforcement authorities.
(l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is 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. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Step 1: identifying the breaches
As stated above, the court found that the respondent contravened s.340 of the Act by:
a. presenting to him a performance improvement plan on 3 March 2020; and;
b. dismissing him from his employment on 11 March 2020.
Step 2: single course of conduct
Notwithstanding that the respondent proposed a separate penalty for each contravention, the respondent also submitted that the two contraventions constituted a single course of conduct. The applicant, in a sense, agreed with that, by arguing that the presentation of the performance improvement plan was part of an elaborate scheme to dismiss the applicant.
This is obviously not a case to which the statutory course of conduct provisions in s.557 of the Act applies. However, the respondent relied on the common law course of conduct jurisprudence.
More specifically, the respondent relied on Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Nine Brisbane Sites Appeal) (2019) 269 FCR 262; (2019) 366 ALR 698; (2019) 286 IR 336; [2019] FCAFC 59. In that case, Allsop CJ said:
10.I agree with the judgment of Rangiah J that the learned primary judge erred in drawing from her conclusion that on each of the nine days of industrial disruption there was a single course of conduct that a single penalty should be imposed on each day – that is, that only one maximum penalty was available where there were multiple contraventions that constituted a single course of conduct. This is the same error discerned in the primary judge’s reasoning and approach in Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 357 ALR 55 at 108 [241].
11.But that error, in my view, had its genesis in the task that the primary judge set herself immediately antecedently. Her Honour asked whether there was a single course of conduct as if (in the absence of the relevant operation of a provision such as s 557 of the Act) there were a single thing or conception of “a course of conduct”. As the Full Court said in Transport Workers’ Union of Australia v Registered Organisations Commissioner (No 2) (2018) 363 ALR 464; [2018] FCAFC 203 (TWU v ROC) at [91]:
… Absent the relevant application of a provision such as s 557(1) of the Fair Work Act, the task is to evaluate the considerations informing the contraventions (factual and legal) in order to impose appropriate penal relief that does not punish twice for the same conduct. To use a phrase such as “a course of conduct” may imply that there is such an abstracted concept to be found, and once found it implies a single contravention or a single maximum penalty. That is the danger of the phrase. Rather, it is necessary (in the absence of a statutory enquiry such as in s 557(1)) to examine all the conduct and enquire how its course and its explanation factually and legally informs the imposition of penal orders, in particular to avoid double punishment. We see nothing in Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417; [2009] FCAFC 171 or Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68; [2017] FCAFC 113 that was intended to displace the need to consider the statute in question and to recognise that the object of the course of conduct principle is to avoid double punishment.
12The danger in the use of the phrase identified by the Full Court in TWU v ROC occurred here: in finding a single course of conduct, the primary judge confined the penal response to one determined by reference to one maximum penalty. The preferable enquiry, conformable with the purpose of the principle and with what was said in TWU v ROC is “to examine all the conduct and enquire how its course and its explanation factually and legally informs the imposition of penal orders, in particular to avoid double punishment.” This enquiry may involve the finding of factual and legal overlap and interrelationship among the contraventions. A conclusion that there is such an interrelationship or overlap, and so, to use the expression, a course of conduct, does not mark the end of the enquiry, but the beginning of one: How, given the nature of the interrelationship or overlap, should that affect the proper fixing of penalties for the found contraventions so as to avoid multiple punishment for the same offending?
In the Nine Brisbane Sites Appeal, Rangiah J said:
123.The course of conduct (or one transaction) principle under the general law has been stated in a variety of ways. A useful exposition of the principle was given by Owen JA in Royer v Western Australia (2009) A Crim R 319; [2009] WASCA 139 at [22]:
… At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
124.In Transport Workers’ Union of Australia v Registered Organisations’ Commissioner (No 2) (2018) 363 ALR 464; [2018] FCAFC 203 at [84]–[91], the Full Court, referring to other judgments of the Full Court, considered the application of the course of conduct principle in the assessment of pecuniary penalties. The principles include the following:
(1)The purpose of the common law course of conduct principle is to ensure that, having regard to the circumstances (factual and legal), a party is not penalised more than once for the same conduct.
(2)That phrase should not simplistically be adopted to transfer multiple contraventions into one contravention, or, necessarily, to impose one penalty by reference to one maximum amount.
(3)The principle cannot, of itself, operate as a de facto limit on the penalty to be imposed.
(4)The application of the principle must be informed by the particular legislative provisions relevant to the proceedings. In particular, weight must be given to the fact that the legislature has deliberately and explicitly created separate contraventions for each relevant action.
(5)The application and utility of the principle must be tailored to the circumstances.
(6)A judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of contraventions.
(7)The task is to evaluate the conduct and its course and assess what penalty is, or penalties are, appropriate for the contraventions.
(8)It is necessary to examine all the conduct and enquire how its course and its explanation factually and legally informs the imposition of penalties, in order to avoid double punishment.
…
126.In this case, the primary judge decided that the Union’s contraventions on 13, 14 and 23 September 2016 should be treated as arising within “a single course of conduct” on each day. Her Honour apparently reached that conclusion because each contravention was referable to the single campaign the Union was conducting. In other words, the contraventions had the single purpose of coercing Hutchinson into engaging only subcontractors that had enterprise agreements with the Union. The Commissioner submits that the primary judge was wrong to decide that there was a single course of conduct on each day.
127.However, the Commissioner has not submitted that her Honour acted upon a wrong principle or made some other error of law or of fact. In Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1, Middleton and Gordon JJ observed at 12 [39] that, “Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions”. But in this case, there was more than bare identity of motive. That multiple actions were taken on the same day, against the same business and with the same motive, provided a basis for her Honour’s conclusion, and it cannot be held that the conclusion was unreasonable or otherwise fell within the ambit of appealable error as described in House v R. The Commissioner’s submission simply expresses disagreement with the conclusion, and provides no basis to set aside her Honour’s exercise of discretion.
In my view, there was not a single course of conduct in this matter. The presentation of the performance improvement plan occurred about a week before the dismissal. Its presentation was part of a scheme to dismiss the applicant and it can accordingly be said that the two actions had the same motivation. However, if the applicant had reacted differently, the dismissal may not have occurred at all, or it may have occurred in a different manner or at a different time. I consider that the two contraventions were discrete and separate.
Step 3: grouped breaches
It would not be appropriate to group the breaches in this case.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breach
In the principal judgment, the court found that, for prohibited reasons, the respondent presented the applicant with a performance improvement plan and used the applicant’s refusal to participate in that process as a pretext for dismissing him.
b. the circumstances in which that conduct took place
As submitted by the applicant, the respondent misrepresented the requirements of the settlement in the Fair Work Commission in an attempt to justify presenting the applicant with a performance improvement plan, and then dismissing him.
c. the nature and extent of any loss or damage sustained
The respondent altered the applicant’s position to his prejudice by presenting him with a performance improvement plan, and then dismissed him. The dismissal on the grounds of alleged misconduct is a matter that will remain on the applicant’s CV, and will require explanation. The detriment of that is somewhat offset by the reasons for judgment in this matter vindicating the applicant’s stance. However, it remains a stain, and it is possible that, in the world where the applicant works, as a senior executive in procurement, a negative slant on the whole episode will prevail over the view taken by the court.
d. whether there had been similar previous conduct
It was not suggested that the respondent has engaged in any similar conduct previously.
e. whether the breaches arose out of the one course of conduct
This has been addressed.
f. the size of the business enterprise involved
The respondent is a large corporation, with human resources and legal assistance.
g. whether or not the breaches were deliberate
The respondent did not argue that the contraventions were anything other than deliberate. Indeed, the contraventions occurred pursuant to an elaborate and sophisticated scheme.
h. whether senior management was involved in the breach
Senior management was integrally involved in the contraventions.
i. contrition, corrective action and co-operation with the authorities
The respondent has shown no contrition. The respondent vigorously defended the proceedings through a two day trial. The respondent made no admissions, has taken no corrective action and has not apologised.
j. the need to ensure compliance with minimum standards
This issue does not arise.
k. the need for specific and general deterrence
In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 46, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [55]:
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
(footnotes omitted)
Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3, Keane, Nettle and Gordon JJ said at [116]:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
(footnotes omitted)
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… 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. 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…
(citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said at [9]:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ….
In its written submissions filed on 21 February 2022, the respondent said:
17.Deterrence (both specific and general) is the “principal and indeed only” objective of pecuniary penalties under the FW Act.10 Retribution, denunciation and rehabilitation have no part to play.11
18.The need to specifically deter Asaleo is low. This matter is the first time that Asaleo (or its predecessor entities) has been found to have contravened the FW Act or earlier federal industrial legislation. Asaleo and its predecessor entities have been in business in Australia for over 60 years. During that period it can be inferred that it has employed many thousands of employees.
19.The Court can be satisfied that Asaleo is not the type of entity that is liable to contravene the FW Act. The evidence was that:
(a)Asaleo is committed to the highest ethical standards, honesty and integrity;12
(b)Asaleo promotes and maintains a workplace where all people treat each other with dignity, courtesy and respect;13 and
(c)Asaleo is committed to working safely and collaboratively, supporting one another to get the job done, and learning how to do things better. It well understands that it is in its interest to create a workplace where people perform at their very best every day.14
:Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482, [55]; CFMMEU v ABCC (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97, [19].
:CFMMEU v ABCC (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97, [19]; CFMMEU v ABCC (The Broadway on Ann Case) (2018) 265 FCR 208, [13].
: Code of Conduct [CB1228].
: Behaviours Policy, [CB1233].
: Annual Report, [CB548].
In relation to specific deterrence, I accept that the respondent has a very good history. However, the facts of this case show that it is not the paragon it claims to be. The contravening conduct in this case was entirely deliberate and undertaken by senior management. For these reasons, specific deterrence is necessary in this case.
General deterrence is also necessary, because employers generally need to be reminded that adverse action for prohibited reasons will have consequences, even where that action is undertaken in an elaborate scheme.
OTHER ISSUES
In Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70, Stone and Buchanan JJ held at [75]:
A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity …
In Fair Work Ombudsman v Bedington [2012] FMCA 1133 Jarrett FM held at [87]:
The cases indicate that a discount on the penalty to be imposed is appropriate where there has been co-operation and admissions early in the course of an investigation or soon after the commencement of proceedings. Such discounts range as high as 30% in some cases. …
There will be no discount in the present case, as there was no ‘guilty plea’.
Step 4: the appropriate penalty
In my view, taking into account all of the circumstances of this case, and particularly the deliberateness of the contraventions and the level of management involved, it is appropriate that the penalty be:
(a)35% of the maximum, or $22,050, for the presentation of the performance improvement plan; and
(b)70% of the maximum, or $44,100, for the dismissal.
The two contraventions warrant different penalties because the dismissal was substantially worse than the presentation of the performance improvement plan.
Step 5: the totality principle
In my view, a total penalty of $66,150 is appropriate for the whole of the respondent’s contravening conduct.
DAMAGES FOR CONTRACTUAL BREACH
The applicant also sought damages for breach of contract. The breach consisted of the respondent not conducting formal performance reviews for at least the 2017, 2018 and 2019 calendar years, contrary to the terms of the contract of employment. The applicant submitted that damages of $10,000 for each year that the contract was breached would be appropriate.
The applicant submitted at paragraph 27 of his submissions filed on 28 January 2022 that:
… The stated contractual intention of undertaking annual reviews was ‘to optimise your contribution towards achieving business objectives and to proactively identify any development needs’. If the annual performance review process had been undertaken in accordance with the contract, there would have been a real opportunity for Mr Lees to impress upon the company the strength of his performance, and to identify any issues needing attention. On the balance of probabilities, compliance would have secured his tenure within the organisation in the longer term, and maximised his levels of remuneration.
However, the respondent frankly conceded that there was no issue with the applicant’s performance until shortly before his dismissal on 11 March 2020. On the contrary, he received pay rises in 2016, 2017, 2018 and 2019, and was promoted to a more senior position in 2018. This can be taken as evidence that he was a valued employee, and had effectively impressed upon the respondent the strength of his performance even without formal annual performance reviews.
In my view, the respondent’s failure to provide the applicant with formal performance reviews was a technical breach only. There does not appear to have been any loss occasioned by the breaches. In these circumstances, it is not appropriate to make any award of damages.
INTEREST
The applicant sought interest on the sums ordered to be paid to him in this proceeding, saying at paragraph 30 of his submissions filed on 28 January 2022 that:
In accordance with section 547 of the Act, interest is payable on amounts ordered payable in this proceeding, taking into account interest from the date the cause of action arose (see section 547(3)). Pursuant to Federal Court Practice Note CM 16, the pre-judgment interest rate is 4% above the Reserve Bank of Australia cash rate, as published by the Federal Court.20 If the causes of action are taken to have accrued on 11 March 2020, interest until judgment at the Federal Court rate21 should be included in the orders made.
: see Tyndall v Goulburn Valley Health (No.2) [2017] FCCA 2112 at [12)].
:4.75% for the period until 30 June 2020; 4.25% from 1 July 2020 to 31 December 2020; 4.10% since 1 January 2021.
The respondent said in his submissions filed on 21 February 2021 that:
30.Section 547 of the FW Act does not apply to amounts to be ordered in this proceeding. Section 547 applies to amounts that an employer is required to pay an employee under the FW Act or an instrument, such as an award or enterprise agreement. It does not apply to pecuniary penalties.
31.This proceeding is a claim for compensation untethered to any payment requirement that is sanctioned by the FW Act.
32.If the Court is to order interest on the economic loss component of $22,552.80 pursuant to its statutory power to do so under its enabling legislation, it is to be calculated as follows:
Interest period Days Rate Calculation 11 March 2020 – 30 June 2020 111 4.75% $325.78 1 July 2020 – 31 December 2020 183 4.25% $480.56 1 January 2021 – 4 March 202222 427 4.10% $1,081.73 Total $1,888.07
:Should the Court reserve its judgment and publish reasons, this amount will have to be revised to reflect interest up to the date of that judgment.
In his oral submissions, the applicant conceded that interest was only payable on the compensation component of the amounts required to be paid. As the compensation amounts include non-economic loss of $7,500, and as the interest on the economic loss of $22,552.80 must be extended up to the day of judgment, the interest calculation is as follows:
Interest on the economic loss of $22,552.80:
Interest period Days Rate Calculation 11 March 2020 – 30 June 2020 (inclusive) 112 4.75% $327.39 1 July 2020 – 31 December 2020 (inclusive) 184 4.25% $481.22 1 January 2021 – 13 April 2022 (inclusive) 468 4.10% $1,193.83 Total $2,002.44
Interest on the non-economic loss of $7,500:
Interest period Days Rate Calculation 11 March 2020 – 30 June 2020 (inclusive) 112 4.75% $109.02 1 July 2020 – 31 December 2020 (inclusive) 184 4.25% $160.26 1 January 2021 – 13 April 2022 (inclusive) 468 4.10% $397.54 Total $666.82
CONCLUSION
There will be orders accordingly.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 13 April 2022
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