Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd (No.2)

[2019] FCCA 1295

FEDERAL CIRCUIT COURT OF AUSTRALIA

PACHECO-HERNANDEZ v DUTY FREE STORES GOLD COAST PTY LTD (No.2) [2019] FCCA 1295

Catchwords:
INDUSTRIAL LAW – Assessment of pecuniary penalties for contravention of s.340 of the Fair Work Act 2009 (Cth) – pecuniary penalty ordered.

Legislation:

Crimes Act 1914 (Cth), s.4AA

Fair Work Act 2009 (Cth), ss.340, 361, 546, 539

Cases cited:

Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977

Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Sayed v Construction, Forestry, Mining and Energy Union

Applicant: ESCARLE MARIENE PACHECO-HERNANDEZ

Respondent: DUTY FREE STORES GOLD COAST PTY LTD

File Number: SYG 2297 of 2017

Judgment of: Judge Manousaridis

Hearing date: On the papers

Date of Last Submission: 5 April 2019

Delivered at: Sydney

Delivered on: 17 May 2019

REPRESENTATION

Solicitors for the Applicant: Mr J Mattson of Bartier Perry Lawyers

Solicitors for the Respondent: Mr M Roucek of FCB Lawyers and Consultants

ORDERS

1. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (FW Act) the respondent pay a pecuniary penalty in the sum of $20,000 for its contravention of s.340 of the FW Act.

2. Pursuant to s.546(3)(c) of the FW Act the respondent pay the pecuniary penalty referred to in order 1 to the applicant within 28 days after the day on which these orders are pronounced.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2279 of 2017

ESCARLE MARIENE PACHECO-HERNANDEZ

Applicant

And

DUTY FREE STORES GOLD COAST PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 17 December 2018 I declared that the respondent (Lagardère) contravened s.340 of the Fair Work Act 2009 (Cth) (FW Act) on 10 April 2017 by dismissing the applicant from her employment because the applicant exercised a workplace right by making multiple complaints in relation to her employment.

2. After I published my reasons (earlier reasons) I directed the parties to file submissions on the question of penalties.[1] The parties did so and they have consented that I determine the question of penalties on the basis of the written submissions they filed without having a further hearing. In these reasons for judgment, therefore, I consider whether I should order Lagardère to pay a penalty for its contravening conduct and, if so, the amount of the penalty.

   [1] Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd [2018] FCCA 3734

Power and principles of assessment

1. Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s.539(1) of the FW Act to include the provisions identified in column 1 of the table to s.539(2) of the Act. Section 340 of the Act, being the provision of the FW Act I have found Lagardère contravened, is included in column 1 of the table to s.539(2) of the Act.

2. Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s.340 of the FW Act at the relevant time are 60 penalty units for an individual and 300 penalty units for a body corporate. Section 12 of the FW Act provides that “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth). It is common ground that $180 was the penalty unit provided for by s.4AA at the time of the contravention. The maximum penalty for a body corporate, therefore, is $54,000.

3. The approach of most courts when assessing penalties for single contraventions of the FW Act is to take into account (to the extent relevant) the factors that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd.[2] These factors are: 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 had been similar previous conduct by the party committing the breach; whether the breaches were properly distinct or arose out of the one course of conduct; the size of the business enterprise involved; whether senior management was involved in the breaches; whether the party committing the breach had exhibited contrition; whether the party committing the breach had taken corrective action; whether the party committing the breach had cooperated with the 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.

   [2] [2007] FMCA 7. In Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [14] Tracey J adopted this same list of factors as “potentially relevant and applicable”.

4. Although any one or more of these factors may be relevant to the assessment of a pecuniary penalty in any given case, “courts have warned against the use of checklists because they give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention”.[3] With these reservations in mind, I propose to consider the factors identified in Mason that are relevant to the circumstances of this case.

   [3] Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; (2010) 199 IR 373 at [10] (Barker J)

5. Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I need only refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[4]

   In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . . 

   [4] [2018] FCA 1563, [19]

Assessment

1. In this part of my reasons I identify the factors that are relevant to the imposition and assessment of a penalty. This part of my reasons assumes familiarity with the earlier reasons.

Nature and extent of the conduct which led to the breach

1. The contravention consisted of a decision to terminate the employment of Ms Pacheco-Hernandez, and the implementation of the decision. As submitted by Ms Pacheco-Hernandez’s legal representative, termination of employment is one of the most severe forms of adverse action. That is a factor that weighs in favour of assessing a penalty at the higher end of the scale.

2. Lagardère submits that the finding in the earlier reasons that it took adverse action for a proscribed reason resulted from its failure to give a reason for dismissal, and that this failure “was due to a misunderstanding of its employment obligations when dismissing an employee during the probationary period”.[5] I do not accept that submission.

   [5] Respondent’s Submissions on Penalty, [20]

3. Lagardère was not found to have contravened s.340 of the FW Act because it failed to give to Ms Pacheco-Hernandez a reason or reasons for deciding to terminate her employment; Lagardère was found to have contravened that section because, by the operation of s.361 of the FW Act, it was taken to have terminated Ms Pacheco-Hernandez for a proscribed reason, and it was not able to prove otherwise. Perhaps Lagardère intends to submit that, at the time it terminated Ms Pacheco-Hernandez’s employment, it believed it was entitled to terminate an employee during the period of an employee’s probation period for whatever reason it chose. There is, however, no evidence to support this; and it is not consistent with the case Lagardère ran at the hearing. Lagardère’s case was that it decided to terminate Ms Pacheco-Hernandez’s employment because she did not “fit within the team” or she did not have “respect for Management”.[6]

   [6] Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd [2018] FCCA 3734, [62]-[65]

Circumstances in which the conduct took place

1. On the findings contained in the earlier reasons, the relevant circumstances in which the conduct occurred were Ms Pacheco-Hernandez having made complaints in relation to her employment, and Lagardère deciding to terminate her employment because she had made such complaints.

2. Lagardère refers to the finding in the earlier reasons that it became unhappy with Ms Pacheco-Hernandez’s employment with Lagardère soon after she commenced working there;[7] and submits that it was under those circumstances that Lagardère determined it was necessary to terminate Ms Pacheco-Hernandez’s employment.[8] That is an assertion that is not based on any findings contained in the earlier reasons and, for that reason, I give it no further consideration.

   [7] Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd [2018] FCCA 3734, [78]

   [8] Respondent’s Submissions on Penalty, [22]

Deliberateness of conduct

1. Lagardère submits that the “Respondent’s basic omission was not part of any deliberate conduct or a pattern of conduct”; rather, at “the time of dismissal, the Respondent held the belief that it was not required to provide a reason for dismissal to the Applicant”.[9] I accept that, on the findings I made in the earlier reasons, and on the evidence that was before me, Lagardère’s decision to terminate the employment of Ms Pacheco-Hernandez was not part of a pattern of conduct involving employees in addition to Ms Pacheco-Hernandez. I am also prepared to accept that, in deciding to terminate the employment of Ms Pacheco-Hernandez, Lagardère was unaware that by so deciding and implementing its decision it was contravening s.340 of the FW Act. That, however, is not to say that its decision to terminate the employment of Ms Pacheco-Hernandez was not deliberate. Its decision was deliberate.

   [9] Respondent’s Submissions on Penalty, [21]

Nature and extent of loss or damage sustained

1. In the earlier reasons I found that Ms Pacheco-Hernandez suffered loss in the amount of around $8,263. That is not an insubstantial loss.

Similar previous conduct and course of conduct

1. There is no suggestion that Lagardère had previously been found to have contravened any provision of the FW Act; and the conduct by which Lagardère contravened s.340 did not form part of a course of conduct involving multiple contraventions of any provision of the FW Act. These are matters in favour of assessing penalty at the lower end of the scale.

Seniority of management involved in contravention

1. The human actors through whom Lagardère contravened s.340 of the FW Act were Ms Colliver and Ms Pritchard. They occupied relatively low managerial positions.

Deterrence

1. As I have already noted, there is nothing to suggest that Lagardère has ever been found to have contravened a provision of the FW Act. That might be a basis for inferring that the contravention I have found is an aberration and, for that reason, there is no reason to include in the penalty a component for specific deterrence. The fact remains, however, that notwithstanding its apparent good record, Lagardère has contravened the FW Act. There is no evidence before me that suggests Lagardère has made any enquiries about why it contravened the FW Act in the manner I have found, and whether there is a need for it to carry out any steps to minimise the risk of its contravening the FW Act again. On the evidence before me it appears that Lagardère simply assumes that it will not contravene the FW Act again. In these circumstances, the penalty that is to be assessed should include an element for specific deterrence to encourage Lagardère to review its procedures and, if reasonably necessary, to revise the procedures to reduce the risk of contravening the FW Act in the future.

2. The amount of the penalty should also contain a component for general deterrence. The penalty should be set at the level that should signal to other employers the need for them to be aware of their obligations under the FW Act, and to comply with them.

Size of business

1. Lagardère submits it is a company that employs approximately 1,500 people in Australia, and is assisted by a team of human resources professionals. The size of Lagardère’s business is relevant to the extent that there is no suggestion that the imposition of a penalty will cause any substantial hardship to Lagardère.

2. The size of Lagardère’s business may also suggest that it has the resources to ensure that it acquaints itself with its obligations under the FW Act, and to put in place procedures to ensure that Lagardère complies with its obligations. These matters, when considered with the absence of any previous findings of contraventions of the FW Act, may be a basis for finding there is little risk that Lagardère will again contravene the FW Act. As I have already noted, however, Lagardère has contravened the FW Act, and there is no evidence before me to suggest that it has made any enquiries about why it contravened the FW Act in the manner I have found, and whether there is a need for it to carry out any steps to minimise the risk of it contravening the FW Act again.

Contrition

1. Lagardère submits that it unreservedly accepts the findings made in the earlier reasons and has “demonstrated contrition in doing so”. I do not accept that this manifests contrition. Contrition consists not only of an expression by the person who contravened a provision of the FW Act that he or she is contrite, but also of actions by the person in the form of considering why the contravening conduct occurred, and considering whether there are reasonable means available to that person for reducing the risk of the conduct occurring again.

Overall assessment

1. Lagardère submits that the penalty I should impose should be a “minor amount” that reflects the fact that it was a single contravention, it was not a deliberate contravention, it was an isolated act, and that Lagardère’s decision was not capricious or without apparent motive.[10] I accept that Lagardère’s conduct constituted a single contravention, and, for that reason, may be treated as an isolated act. Given my finding that Lagardère did not prove otherwise than that it terminated Ms Pacheco-Hernandez’s employment because she made a complaint in relation to her employment, it is not open to Lagardère to submit that its decision to terminate Ms Pacheco-Hernandez’s employment was not capricious or without an apparent motive. The findings on the basis of which the penalty must be assessed is that Lagardère terminated Ms Pacheco-Hernandez’s employment because she made a complaint in relation to her employment and, for that reason, she exercised a workplace right. Further, this part of Lagardère’s submission ignores the nature of the adverse action, namely, termination of employment, the not insubstantial economic harm Lagardère’s contravening conduct caused Ms Pacheco-Hernandez, and the need for specific and general deterrence that I considered above.

   [10] Respondent’s Submissions on Penalty, [48]

2. In light of these matters, I consider that the appropriate penalty for Lagardère’s contraventions of s.340 of the FW Act is $20,000, and I propose to make an order that Lagardère pay a pecuniary penalty in that sum.

To whom the penalty should be paid

1. Subsection 546(3)(c) of the FW Act provides that the Court may order that a pecuniary penalty be paid to a “particular person”. Ms Pacheco-Hernandez’s legal representative submits that the penalty I order Lagardère pay should be paid to Ms Pacheco-Hernandez. In my opinion, Ms Pacheco-Hernandez is in the position of the applicant in Sayed v Construction, Forestry, Mining and Energy Union:[11]

   In this appeal . . . the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If [the applicant] had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.

   [11] [2016] FCAFC 4, [116]

2. It is appropriate, and I therefore propose, to make an order under s.546(3)(c) of the FW Act that the penalty I propose Lagardère pay be paid to Ms Pacheco-Hernandez, and that Lagardère pay the penalty within 28 days after the date on which I pronounce the order.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 17 May 2019