Printing and Kindred Industries Union & Ors v Vista Paper Products Pty Ltd

[1994] IRCA 133

INDUSTRIAL LAW - Proceedings for enforcement of reinstatement award - Application for penalties, including daily penalties - Whether it should be accepted that employer was financially incapable of making back payments required by the award - Relevant considerations in determining the amounts of the appropriate penalties - Applications for orders for payment of underpaid moneys - Relevance of other income of employees during the material period - Computation of appropriate amounts.

Industrial Relations Act 1988, ss.178, 179

PRINTING AND KINDRED INDUSTRIES UNION, GEORGE DONALD ANDERSON,
WILLIAM BANKS, JOHN LESLIE BECUS, JAMES ALBERT BENTON, BRUNO BROESEL, RONALD WILLIAM BROOM, LAURIE CAMENZULI, JOHN CHARLES FORREST, GREGORY MAXWELL HAYWARD, MAXWELL GEORGE HAYWARD, RONALD HILL, JOHN JENKINS, JOHN GRENVILLE KEMP, CHAN YEW LEONG, ALWYN MALLITT, BRUCE RONALD MARHEINE, DONALD DREW McARTHUR, MALCOLM JOHN MCDONALD, JAMES MOIR, ROBERT FRANCIS NICHOLLS, DENIS POWELL, JOHN STAFFORD ROBERTSON, RAYNER RUDITSCH, CHARLES ROY SMITH, NESTOR TAN, ROY EDWARD WALKER, KIM WILKINSON and BARRY RAYMOND WINMILL
v.
VISTA PAPER PRODUCTS PTY LIMITED and JOHN McNAMEE
No. NI.104 of 1994

CORAM:    WILCOX CJ
PLACE:    SYDNEY

DATE:     14 DECEMBER 1994
IN THE INDUSTRIAL RELATIONS COURT)
OF AUSTRALIA  )  No. NI.104 of 1994
NEW SOUTH WALES DISTRICT REGISTRY)

BETWEEN:PRINTING AND KINDRED INDUSTRIES UNION, GEORGE DONALD ANDERSON,

WILLIAM BANKS,
  JOHN LESLIE BECUS,   JAMES ALBERT BENTON,   BRUNO BROESEL,
  RONALD WILLIAM BROOM,

LAURIE CAMENZULI,

JOHN CHARLES FORREST,

GREGORY MAXWELL HAYWARD,

MAXWELL GEORGE HAYWARD,

RONALD HILL,

JOHN JENKINS,
  JOHN GRENVILLE KEMP,

CHAN YEW LEONG,

ALWYN MALLITT,
  BRUCE RONALD MARHEINE,
  DONALD DREW McARTHUR,
  MALCOLM JOHN MCDONALD,
  JAMES MOIR,

ROBERT FRANCIS NICHOLLS,

DENIS POWELL,

JOHN STAFFORD ROBERTSON,

RAYNER RUDITSCH,
  CHARLES ROY SMITH,
  NESTOR TAN,
  ROY EDWARD WALKER,
  KIM WILKINSON and
  BARRY RAYMOND WINMILL

Applicants

AND:VISTA PAPER PRODUCTS PTY LIMITED

First Respondent

JOHN McNAMEE

Second Respondent

CORAM:      WILCOX CJ
PLACE:         SYDNEY
DATE:           14 DECEMBER 1994

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The following penalties be imposed on Vista Paper Products Pty Limited, the first respondent:

a.a penalty in the sum of one thousand dollars ($1,000) in respect of its breach of the Vista Paper Products Pty Limited Reinstatement Award 1991 between 18 December 1991 and 19 November 1993; and

b.a penalty in the sum of one hundred dollars ($100) per day in respect of the said breach for each of the 317 days from 29 November 1993 to 12 October 1994 - a total of thirty one thousand seven hundred dollars ($31,700).

1. The following penalty be imposed on John Christopher McNamee, the second respondent:

a.a penalty in the sum of one hundred dollars ($100) per day in respect of his breach of the Vista Paper Products Pty Limited Reinstatement Award 1991 for each of the 317 days from 29 November 1993 to 12 October 1994 - a total of thirty one thousand seven hundred dollars ($31,700).

1. Each of the respondents pay to the Registrar of the Court the penalties imposed on that respondent within two months from the date of this order, or such further time as a Judge on application may allow.

1. The Registrar pay to Printing and Kindred Industries Union, the first applicant, one half of all penalties paid to him pursuant to this order and the remainder to the Consolidated Revenue Fund.

1. Within two months of this order or such further time as a Judge on application may allow, the first respondent Vista Paper Products Pty Limited pay to the following applicants the following amounts:

Kim Wilkinson  $64,774

Barry Winmill              $66,720
  Roy Walker                 $66,720
  Nestor Tan                  $64,774
  Charles Smith              $70,612
  Rayner Ruditsch          $64,774
  John Robertson           $64,774
  Dennis Powell              $68,944
  Robert Nicholls           $66,720
  James Moir                 $66,720
  Malcolm McDonald     $64,774
  Donald McArthur        $69,361
  Bruce Marheine           $64,357
  Alwyn Mallitt               $64,357
  Chan Leong                 $66,720
  John Kemp                  $69,500
  John Jenkins                $72,836
  Roland Hill                  $70,612
  Gregory Hayward        $68,805
  Maxwell Hayward       $66,859
  John Forrest                $67,832
  Laurie Camenzuli         $66,859
  Ronald Broom             $64,357
  Bruno Broesel             $64,774
  James Benton              $68,805
  John Becus                  $64,774
  George Anderson        $64,774
  William Banks             $66,720

Note:Settlement and entry of orders is dealt with in Order 37 of the Industrial Relations Court Rules. 

IN THE INDUSTRIAL RELATIONS COURT)
OF AUSTRALIA  )        No. NI.104 of 1994
NEW SOUTH WALES DISTRICT REGISTRY)

BETWEEN:PRINTING AND KINDRED INDUSTRIES UNION, GEORGE DONALD ANDERSON,

WILLIAM BANKS,
  JOHN LESLIE BECUS,   JAMES ALBERT BENTON,   BRUNO BROESEL,

RONALD WILLIAM BROOM,

LAURIE CAMENZULI,

JOHN CHARLES FORREST,

GREGORY MAXWELL HAYWARD,

MAXWELL GEORGE HAYWARD,

RONALD HILL,

JOHN JENKINS,
  JOHN GRENVILLE KEMP,

CHAN YEW LEONG,

ALWYN MALLITT,

BRUCE RONALD MARHEINE,

DONALD DREW McARTHUR,

MALCOLM JOHN MCDONALD,

JAMES MOIR,

ROBERT FRANCIS NICHOLLS,

DENIS POWELL,

JOHN STAFFORD ROBERTSON,

RAYNER RUDITSCH,
  CHARLES ROY SMITH,
  NESTOR TAN,
  ROY EDWARD WALKER,
  KIM WILKINSON and

BARRY RAYMOND WINMILL

Applicants

AND:VISTA PAPER PRODUCTS PTY LIMITED

First Respondent

JOHN McNAMEE

Second Respondent

CORAM:    WILCOX CJ
PLACE:    SYDNEY
DATE:     14 DECEMBER 1994

REASONS FOR JUDGMENT

WILCOX CJ:  Presumably, this is the final phase of an industrial trench-war that has proved costly to all participants; perhaps disastrous for some.  The war has included an orgy of litigation.  Its history shows the importance of industrial disputants accepting the umpire's decision.  Perhaps more importantly in a time of widespread workplace change, it also demonstrates - yet again - that structural workplace reform and elimination of undesirable work practices can be achieved only by co-operation; not by confrontation.

The nature of the present case

The proceeding is an application under ss.178 and 179 of the Industrial Relations Act 1988. It is made by a registered employee organisation, Printing and Kindred Industries Union ("PKIU"), and 28 individuals, former employees of the respondent, Vista Paper Products Pty Limited ("Vista"). The applicants seek the imposition of penalties on Vista and its former controlling director, John Christopher McNamee, and an order that Vista pay the former employees moneys payable under a reinstatement award.

The making of the reinstatement award

The history of the matter appears in documents, many of which are already in the public domain.  The relevant facts are now beyond dispute. 

Vista was incorporated in March 1990.  Mr McNamee was one of two foundation directors.  He remained a director until 12 October 1994.  At least until that day, he dominated the company.  His actions were the company's actions. 

In July 1990 Vista purchased a paper coating business conducted at Emu Plains, west of Sydney.  Mr McNamee felt it was necessary to make substantial changes to the company's method of operation and to existing work practices and employees' entitlements.  He held discussions with the employees and their union, PKIU.  He was not able to reach agreement with them.  So, after consulting an officer of the New South Wales Chamber of Manufacturers, Mr McNamee decided unilaterally to implement the changes.  He directed the company's Operations Manager, David Davis, to increase working hours by five hours per week and to make changes in some work practices, in exchange for an increase in wages, from 4 March 1991.  Mr Davis issued a notice to that effect.  It was not well received by the employees.  They held a stop-work meeting on 26 February and went on strike for 24 hours.  After again consulting the New South Wales Chamber of Manufacturers, Mr McNamee had Mr Davis issue a letter to each employee specifying the new work conditions and requiring the employee to sign a document accepting them.  The letter said that failure to attend for work, in accordance with the new conditions, "will be regarded as refusal of a lawful and reasonable direction, and will constitute a repudiation of your contract of employment.  Faced with such a repudiation the company will summarily terminate your services".  Upon receipt of the letters, the employees held another stop-work meeting and 24 hour strike.  Only a couple of employees accepted the new conditions.  The rest were dismissed.  Vista immediately replaced the dismissed employees.  The dismissed employees, or most of them, set up a picket line outside the company's premises.  They maintained the picket line for about nine months.  They did not close down operations - it seems they did not attempt to do so - but they caused some inconvenience.  There were occasional incidents between the picketers and the new employees.

During the period 4 to 14 March PKIU negotiated with Vista regarding reinstatement of the dismissed employees.  No agreement was reached.  So, on 14 March, PKIU notified the Australian Industrial Relations Commission ("the AIRC") of the extence of an industrial dispute concerning this issue.

In the meantime, on 7 March, PKIU had served a log of claims on employers in several States (including Vista) in the pulp and paper industry.  The log contained demands with respect to wages and conditions generally.  It also demanded that "the employer not dismiss any employee" and "the employer shall reinstate forthwith all employees dismissed".  At about that time, PKIU informed Vista that it would seek an award reinstating the employees dismissed on 4 March.  None of the employers served with the log of claim acceded to its demands.  On 22 March 1991, PKIU notified the AIRC of an alleged industrial dispute with those employers. 

The matter came before Deputy President Riordan.  Some of the employers told him they did not object to a finding of the existence of an industrial dispute; others said they objected to a finding but offered no evidence or argument to support their objection.  Vista strenuously opposed a finding of dispute.  It said the notified dispute was not genuine and, in any event, lacked an interstate character.

Deputy President Riordan decided to inquire into the question whether Vista was a party to an industrial dispute extending beyond the limits of one State.  On 2 May 1991 he determined that there was an industrial dispute, within the meaning of the Industrial Relations Act, between the PKIU and all the employers named in the log of claims, including Vista.

Vista applied for leave to appeal to a Full Bench of the Commission against this finding and, in the meantime, sought a stay of proceedings.  Deputy President Moore refused the stay application.  However, he indicated that the Full Bench of the Commission would hear the leave application expeditiously.  It did so on 5 June 1991 but reserved its decision. 

Before the Full Bench decision was announced, in July 1991 PKIU's application for reinstatement came before Deputy President Riordan.  Vista sought the dismissal of the application under s.111(1)(g)(iii) of the Act on the basis that the Commission lacked jurisdiction.  The Deputy President refused to dismiss the application.  He said it was appropriate to hear all the evidence and argument before reaching a final conclusion on jurisdiction.  Vista then asked him to refer a question of law, concerning the Commission's jurisdiction and powers, to the Federal Court of Australia, which then exercised jurisdiction under the Industrial Relations Act.  Deputy President Riordan refused to do so.  He said it would be difficult to state a case without a comprehensive account of the facts and they were not yet all before him.  Vista then sought an adjournment of any further hearing by Deputy President Riordan pending the outcome of the application for leave to appeal.  The Deputy President refused the application but indicated that no order or award would issue until Vista had the opportunity of testing his previous rulings on appeal.

On 28 August 1991 the Full Bench delivered a decision refusing leave to appeal against Deputy President Riordan's finding of dispute.

On 13 December 1991 Deputy President Riordan decided PKIU's application for a reinstatement award.  He criticised Vista's actions in February and early March.  He said the course then taken by it was "the very antithesis" of the processes intended by the structural efficiency principles applicable in the industry.  He referred to Vista's "confrontationist attitude" and criticised Mr McNamee's failure to accept what he (Deputy President Riordan) thought was a genuine offer by the employees to work during a "cooling off" period after 4 March without harassing the employees who had accepted Vista's new conditions of employment.  He went on:

"The evidence does not disclose any misconduct, negligence or failure by the employees to properly discharge their duties which would justify the termination of their employment.  Rather the evidence indicates a forceful plan by Vista to achieve by the processes of confrontation a very dramatic change in the terms and conditions of the employment of its employees, which terms and conditions had previously been agreed.  The changes demanded by Vista affected a whole range of issues as described earlier herein.

What occurred was probably a repudiation by Vista without notice of the contract of employment with each of the employees concerned.  This action may be unlawful and it certainly is unreasonable and unfair.

The evidence given in these proceedings is sufficient to convince me that the PKIU had not imposed any ban or engaged in a stoppage of work on 4 March, 1991.  In fact, the evidence is to the contrary:  the PKIU was actively seeking a resumption of work on 4 March following the 24 hour protest stoppage on the preceding Friday, 1 March, 1991, and made several proposals to achieve this result, but each proposal was rejected by Vista.

It was the responsibility of the management of Vista that there was no resumption of work on 4 March, 1991."

Deputy President Riordan considered whether events since the terminations of employment had caused such a breakdown in the relationship between the dismissed employees and the Vista management that it was now impossible to restore a proper employment relationship.  After a lengthy analysis of the evidence, he held they had not.  The Deputy President announced that he proposed to make an award obliging Vista to reinstate the employees in accordance with the PKIU proposal.

On 18 December 1991, Deputy President Riordan published an award entitled "the Vista Paper Products Pty Limited Reinstatement Award 1991".  The award applied to Vista, the PKIU and its members.  It was made to operate from 16 December 1991.  Its critical provision was clause 3 which read:

"(a)That Vista Paper Products Pty Limited shall reinstate the persons named in the schedule hereto (being persons previously employed by Vista Paper Products Pty Limited and hereinafter referred to as the former employees) in their former positions on and from 10 July 1991.

(b)That all rights, incidents, benefits, entitlements or conditions in employment possessed, held by, or applying to the former employees immediately prior to the date of the termination of their employment shall be retained by and apply to the former employees upon their reinstatement (except in so far as those terms and conditions of employment included any notice of termination of their employment).

(c)That the period between the date of the dismissal and the date of reinstatement pursuant to this award shall be treated as continuous service with the employment of the former employees prior to their dismissal as though the former employees had never been dismissed and without limiting the generality of this provision the former employees shall be entitled to continuity of the terms and conditions of employment for the former employees applying immediately prior to the termination of employment of the former employees (except in so far as those terms and conditions of employment included any notice of termination of their employment)."

The schedule contained a list of 28 names, being those of the individual applicants in this proceeding.

Vista did not comply with the award.  This failure is the basis of the present application.  Mr McNamee gave three reasons for Vista's failure to comply with the award.  First, he said he was advised to appeal against the making of the award.  Second, he said he had experienced difficulty in understanding "how the award was meant to operate".  The suggested difficulty arose out of the use of the words "on and from" 10 July.  In order to get the matter out of the way, it is desirable to indicate that I cannot accept that Mr McNamee had a genuine difficulty in understanding what Deputy President Riordan intended.  Although, I agree, it was inappropriate to order reinstatement "on" a date earlier than that of the award, it was clear enough what was meant.  The reinstatement was to be made retrospective to 10 July.  It is noteworthy that Deputy President Riordan was never asked to clarify his intention.  The third reason given by Mr McNamee was expressed in this way:  "if it was meant to operate in such a way that we had to make a payment of wages for six months for those people, we wouldn't have been able to afford to".  I will return to this reason.

The challenges to the award

Whatever the reason or reasons, Vista did not comply with the award.  It made no approach to its dismissed employees.  Instead, on 3 January 1992, it filed an application for leave to appeal to the Full Bench against Deputy President Riordan's decision to make the reinstatement award.  The notice of appeal is not in evidence.  Mr McNamee said it originally put in issue the merits of the decision, as well as jurisdiction, but the company later confined its appeal to a challenge to jurisdiction.  It is not clear to me that this is correct.  The Full Bench decision dealt at some length with merit considerations; including the appropriateness of reinstatement and, in particular, of the reinstatement being made retrospective.

The evidence does not reveal the date of the Full Bench hearing.  The decision of the Full Bench (Justice Peterson, Deputy President Moore and Commissioner Merriman) was given on 7 April 1992.  Before that day, there were at least two further decisions by Deputy President Riordan on aspects of the dispute that I need not detail.  The Full Bench held that the Commission had jurisdiction to entertain the dispute.  It upheld Deputy President Riordan's finding that reinstatement was appropriate but expressed reservations about the award being made retrospective.  The Full Bench granted leave to appeal, but it dismissed the appeal save to the extent that it raised an issue about the operation of the award prior to 18 December 1991.  It adjourned that question to a date to be fixed.

Notwithstanding the Full Bench's affirmation of Deputy President Riordan's finding on jurisdiction, Vista continued to contest that issue.  On 20 May 1992 Vista made an application to Gaudron J for the issue out of the High Court of Australia of an order nisi for writs of prohibition and certiorari directed to the members of the Full Bench and Deputy President Riordan.  Her Honour refused an order nisi but she directed Vista to make its application returnable before the Full Court of the High Court.  Before the matter came before the Full High Court, the Full Bench of the AIRC dealt with the matter left unresolved in its earlier decision:  the operation of the reinstatement award between 10 July and 18 December 1991.  The Full Bench - now slightly differently constituted, Vice President Moore (as he had become) and Commissioner Merriman sitting with Deputy President Polites instead of Justice Peterson - held that there was no difficulty of principle in making the award operate between those dates, on the understanding that clause 3 was intended to operate in the following way on 16 December 1991:

"Vista had to offer to each of the employees in the schedule to the Reinstatement Award, a position equivalent to that held at 4 March 1991 and then to pay to each employee wages that would have been payable to those employees between 10 July 1991 and the date the obligation to reinstate arose as if they had worked during that period.  Vista would thereafter have to continue to pay the employees if they worked or continued to be ready, willing and able to work subject to any lawful termination of their employment."

However, the Full Bench declined to make a specific determination regarding Vista's obligations under the award.  It referred to Vista's recent application "to expand the scope of the appeal by raising questions concerning the appropriateness of making an award in the terms of the Reinstatement Award in the absence of evidence of, for example, the incomes the employees in the schedule may have received during the period 10 July 1991 and 16 December 1991".  The Full Bench concluded:

"In our view the appropriate course for us to follow is to direct, pursuant to s.45(7)(c), Deputy President Riordan to make such variations to the Reinstatement Award as he considers appropriate in exercise of powers under s.113 for the purpose of removing uncertainty or ambiguity in that award.  It will be a matter for Deputy President Riordan whether he wishes to hear any further evidence before deciding what variations, if any, should be made though, in our view, his Honour should consider clarifying whether Vista is obliged to pay an amount to each employee to whom the Reinstatement Award applies equivalent to wages that would have been earnt up to 16 December 1991."

Before the matter could be dealt with by Deputy President Riordan, Vista's High Court application was heard, on 23 September 1992.  The case is reported:  see Re Printing and Kindred Industries Union; ex parte Vista Paper Products Pty Ltd (1993) 113 ALR 421; 67 ALJR 604. Judgment was delivered on 3 June 1993. The Court (Brennan, Dawson, Toohey, Gaudron and McHugh JJ) unanimously held that the AIRC had jurisdiction. Vista's application was dismissed.

The aftermath of the High Court decision

On the day the High Court judgment was delivered John Cahill, Secretary of PKIU, wrote to Mr McNamee demanding that, in view of the High Court decision:

"... you reinstate the employees in question, as earlier referred to in my correspondence of 2 January, 1992, expressed their willingness to commence work in accordance with the Award.  It is essential for the Company to comply with the Award which the High Court has unanimously held to be within the jurisdiction of the Commission.

Please contact the undersigned, as a matter of urgency, to facilitate the reinstatement of the       employees."

Mr McNamee did not respond to this letter.  However, on the following day, he wrote to each of the dismissed employees a letter "to offer you employment" with Vista from Tuesday, 15 June.  The letter said:  "Your income and other conditions of employment will be in accordance with the Pulp & Paper Industry (Production) Award 1973".  Reference was made to a requirement that the employee "accept all lawful directions given by the company, or its authorised managers and supervisors" and "work in harmony with current employees".  Each letter invited its recipient to accept the offer by completing and returning a form of acceptance.

On 7 June, Mr Cahill wrote a further letter to Mr McNamee.  He referred to the letters received by the union's members and went on:

"We are instructed by our members that they shall accept all lawful directions given by the company during the course of their employment and, as has been made clear by way of undertaking and otherwise, will work in harmony with current employees.

However, we remind you of the terms of the Vista Paper Products Pty Ltd Reinstatement Award, 1991.  Those terms require that the employees being reinstated in their former positions (which has not yet been done) and that they be reinstated with the rights, incidents, benefits, entitlements or conditions in employment possessed or applying to them immediately prior to the date of the termination of their employment.  To the extent that your letter requires their income and other conditions of employment to be in accordance with the Pulp and Paper Industry (Production) Award, 1973, we assume, to give you the benefit of the doubt, that you are not implying reductions in rates of pay or conditions of employment made applicable by the Reinstatement Award itself.

We are of course, on behalf of the Union and on behalf of the employees, willing to resume negotiations relating to structural efficiency in your establishment and look forward to you contacting us in relation to same as soon as is possible."

Despite the conciliatory tone of this letter, Mr McNamee responded on 10 June with a letter that demonstrated he had learned nothing from the Commission's decisions or the experience his company had undergone.  He wrote:

"I feel I should reply to your letter of 7 June 1993.

I confirm that we have offered employment to a group of people formerly employed by us who abandoned their employment in March 1991 by withdrawing their labour in breach of the Dispute Settlement Procedure in the Pulp and Paper Industry (Production) Award, 1973 and by refusing to return and work in accordance with the provisions of the Award including that procedure.  Their action in breach of their Award (with your encouragement) caused us considerable loss and damage.

Although we reserve our rights with respect to loss we have suffered we have attempted in our letter of 4 June 1993 to offer a means by which this whole issue can end.  Our letter, a copy of which you apparently have obtained, set down a number of reasonable conditions.

These were firstly that the former employees would accept lawful directions from us if they resumed employment.  Those lawful directions would be to work in accordance with the Pulp and Paper Industry (Production) Award 1973.

Secondly, they would have to accept employment under the Pulp and Paper Industry (Production) Award 1973.  Previous restrictive practices having been abolished following the breach of contract perpetrated by the former employees in 1990 and 1991.

Thirdly, the employees were required, as with every new starter at any workplace of which I am aware, to complete an information form detailing their previous employment.  This information would have enabled us to be aware of any occupational health or workers compensation issue associated with individual employees.  As you know employees are obliged to disclose such matters before accepting employment.

Employment was available to those prepared to meet these reasonable and commonplace conditions.

Employment was not and is not available pursuant to the 'Vista Paper Products Pty Limited Reinstatement Award 1991'.

We look forward very much to this unhappy period being put behind our company.  I can assure you also that there is no need for you to 'resume negotiations relating to structural efficiency' in this establishment."

On the same day Vista sent letters to each of the dismissed employees saying:

"It is regrettable that you have decided not to accept our reasonable offer of employment as outlined in our letter of 4 June, 1993, even though we went to a great deal of trouble to ensure that you had every opportunity to take up employment.

We understand that over time your circumstances have changed and we accept that you no longer want to work here.

We wish you the best for the future."

On the following day Mr Cahill wrote again to Mr McNamee suggesting he had "misunderstood (either deliberately or otherwise) the position of our members".  He said they had made clear in letters to Mr McNamee on 7 June that they had accepted the offer and understood they were to commence on 15 June.  He went on:

"As we made clear to you in earlier correspondence the conditions under which they are to be employed, if the order of Deputy President Riordan is to be obeyed, are the conditions under which they were employed immediately prior to receiving notice of termination on or before 4 March 1991.

Our members have made it clear that they are prepared to accept 'all lawful directions given by the company, or its authorised managers and supervisors, and ... must accept as a condition of ... employment that [they] will work in harmony with current employees.'

In accordance with the letter dated 4 June 1993 they have accepted your offer of employment and, both in accordance with that offer and in accordance with the order of Deputy President Riordan, you are obliged to employ these workers.

We write this letter to clarify that you have misunderstood the situation of the employees.  They accept your offer of employment and are ready, willing and able to commence work and, in accordance with your direction, commence work at 6.00am on Tuesday 15 June 1993."

Mr McNamee responded by a letter, dated the same day, in which he questioned whether Mr Cahill represented the dismissed employees, asserted that the recipients of the letter of 4 June had failed to agree to his conditions "so our offer has lapsed" and concluded:

"Since we do not accept that you necessarily have a role with respect to this matter, we reserve our right to ignore further correspondence from you."

Notwithstanding this letter, the various employees wrote to Vista confirming their acceptances of the offer of employment and their availability to commence work on 15 June.  On that day 30 dismissed employees, including all but two of the present individual applicants, presented themselves at Vista's premises.  They were refused entry.

On 16 June Mr Cahill again wrote to Mr McNamee recording what had happened and stating that the union:

"is continuing its role to represent the interests of its members and has conveyed in earlier correspondence, its willingness to facilitate a proper settlement in accordance with the Reinstatement Award and members' rights". 

Mr McNamee did not reply.

The variation of the award

The matter went back to Senior Deputy President Riordan (as he had become).  During August he dealt with some preliminary skirmishes about procedural matters.  On 1 September 1993 he gave a decision substantially reaffirming the original award but indicating an intention to make an amendment to clarify its intent.  He took the opportunity to explain why he had selected 10 July 1991:

"Perhaps I should indicate my reason for selecting two dates rather than one.  The employees' services were terminated on 4 March 1991 and it may well have been appropriate to have made the award operative, in a sense, from that date.  Having regard to all of the submissions that were made and all the evidence given and the program which had been set, it appeared to me to be a fair and reasonable compromise to require reinstatement from 10 July, but to make sure that the period from March to July counted as service for all other purposes.

By making the award operative from 16 December, 1991 I sought to ensure that Vista was not placed in the impossible position of being potentially guilty of an offence punishable at law for a breach of the award which it could not possible [sic] have complied with, because of the retrospective operation.  This question of the retrospective effect of awards, which have that effect, that is, creating a duty which cannot be complied with, has been the subject of much discussion by members of this Commission and its predecessors.  It has, in fact, been used by more than once to justify not making retrospective awards.  It seems to me that where reinstatement applications are concerned, there is a great disservice done to employees who are wrongly, or improperly, or unfairly dismissed, if an award is not made requiring them to be treated as employees from a date earlier than the award made.

Of course, what that date should be is dependent entirely upon the circumstances, but where it is established that the Commission's jurisdiction, such as it is, should be utilised and invoked, then it must be invoked on the basis of what is fair, just and reasonable.  I therefore set out to achieve a situation where Vista would not be placed in an impossible and unfair position and the rights of employees would be similarly protected."

On 16 September 1993 Senior Deputy President Riordan made a formal order varying his award of 18 December 1991, by deleting the words and figures "on and from 10 July 1991" in clause 3(a) and substituting the following:

"or a position equivalent thereto in status, wage rates and conditions of employment and to pay to each employee wages that would have been payable to each such employee between 10 July 1991 and the date of re-instatement pursuant to this award as if they had worked during that period, and after the date of reinstatement under this award to continue to pay such employees if they worked or continued to be ready, willing and able to work subject to any lawful termination of their employment."

It seems that in mid-October Vista's solicitors filed four applications for variation of the reinstatement award, the effect of any of which would have been to eliminate or substantially reduce the company's obligations under it.  For reasons Mr McNamee was unable to state, all these applications were abandoned.  Notwithstanding that fact, and the clarification of the award by Senior Deputy President Riordan, Vista took no action to comply with it.

The bans clause

Sometime about October or early November 1993, PKIU applied to the AIRC for the addition of a bans clause to the reinstatement award.  The application was granted.  On 19 November 1993 Deputy President Macbean amended the award by adding a new clause 5:

"(a)Vista Paper Products Pty Limited of Corner Russell Street and Old Bathurst Road, Emu Plains, New South Wales, and Mr John McNamee, Company Chairman, and Mr David Davis, Operations Manager, shall not whether directly or indirectly, be a party to or be concerned in conduct which hinders, prevents or discourages:

(i)the observance of this award; or

(ii)the performance of work in accordance with this award; or

(iii)the acceptance of, or offering for, work in accordance with this award.

(b)Vista Paper Products Pty Limited and Mr John McNamee, Company Chairman, and Mr David Davis, Operations Manager, shall commit a new and separate breach of this clause on each and every day on which Vista Paper Products Pty Limited and Mr John McNamee, Company Chairman, and Mr David Davis, Operations Manager, is or are directly or indirectly concerned in or is a party to, conduct as described in subclause (a) of this clause.

(c)Leave is reserved to all parties to make application to vary this clause either by adding or deleting named parties."

The Deputy President ordered that the order for amendment come into force on and from 29 November 1993.

This clause opened the way to the imposition of daily penalties on Vista and, for the first time, penalties (being daily penalties) on Mr McNamee and Mr Davis personally. This is because of s.178(3) of the Industrial Relations Act, to which I will come later.

On 10 December 1993 a Full Bench of the Commission (Vice President Moore, Justice Munro and Commissioner Jones) refused two applications for leave to appeal against procedural rulings of Senior Deputy President Riordan in August and September.

The March 1994 "reinstatements"

At some stage PKIU notified the AIRC of an alleged breach of the bans clause in the reinstatement award.  The evidence does not disclose when this happened.  It was probably before 16 March 1994.  On that day Vista sent to each of the dismissed employees a letter that read:

"We refer to the Vista Paper Products Pty Limited Reinstatement Award (the 'Award').

You are hereby reinstated in accordance with the terms of paragraph 3 of the Award dated 18 December 1991.

Please present yourself for work on (a specified date) at the above address at 2.00pm and report to Owen Scott at reception."

On 18 March the alleged breach of the bans clause came before Senior Deputy President Macbean (as he also had become).  He directed Vista and Mr McNamee to "take all steps to bring about an end to the continuing breach of the bans clause" and required the parties to attend a conciliation meeting under Commissioner Jones on 22 March.  This was unsuccessful.  On 23 March, the dismissed employees attended Vista's premises to confirm their reinstatements.  They were turned away with a letter reading:

"Thank you for presenting yourself for work today and confirming your reinstatement in employment with Vista Paper Products Pty Limited.

Unfortunately Vista Paper Products Pty Limited is not in a position to provide you with work today.

This letter formally gives you one (1) week's notice of termination of your employment with Vista Paper Products Pty Limited.  We recommend that you discuss this matter with a legal adviser or your Union.

We are negotiating with the PKIU a settlement of this matter and we hope to bring a positive conclusion to this matter in the near future."

Despite the reference to "one week's notice of termination", Vista did not tender payment of wages in lieu of notice.  If there were negotiations with the PKIU, they came to nothing.

On 30 June 1994 the matter was again before Senior Deputy President Macbean; this time for determination of an application by Vista to delete from the bans clause the references to Mr McNamee and Mr Davis. The application was successful insofar as it related to Mr Davis, but not in relation to Mr McNamee. On that same day the Senior Deputy President made a finding under s.181(6) of the Industrial Relations Act "that a breach of clause 5 of (the reinstatement award) is continuing" and issued a certificate under s.183(2) of the Act in relation to Vista. Such a certificate is a condition precedent to a proceeding under s.178 in relation to a bans clause: see s.182 of the Act. Seven days later he made a similar finding, and issued a similar certificate, in relation to Mr McNamee.

The applicants' claims

This proceeding was commenced in the Federal Court of Australia on 22 July 1993. PKIU was the only applicant named in the Application filed that day. Vista was the only respondent. However, the applicant subsequently obtained an order joining the 28 individuals as additional applicants. The proceeding was transferred to this Court on 30 March 1994 pursuant to s.64 of the Industrial Relations Reform Act 1993. After Senior Deputy President Macbean's certificates of 30 June and 7 July 1994, Mr McNamee was added as a respondent. The Statement of Claim was amended to cover the relief now sought.

The principal provision relied on by the applicants is s.178 of the Industrial Relations Act.  Relevantly, it reads:

"178(1)Subject to section 182, where an organisation or person bound by an award or an order of the Commission breaches a term of the award or order, a penalty may be imposed by the Court or, except in the case of a breach of a bans clause, by a court of competent jurisdiction.

(2)Subject to subsection (3), where:

(a)2 or more breaches of a term of an award or order are committed by the same organisation or person; and

(b)the breaches arose out of a course of conduct by the organisation or person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.

(3)Subsection (2) does not apply in relation to:

(a)a breach of a term of an award or order that is committed by an organisation or person after a court has imposed a penalty on the organisation or person for an earlier breach of the term; or

(b)a breach of a term of an award or order that is taken to have been committed by a person under a provision included in an award or order under paragraph 111(1)(e).

(4)The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award or order is:

(a)where the penalty is imposed by the Court:

(i)if the breach is taken to have been committed under a provision included in an award or order under paragraph 111(1)(e) - $500; and

(iia) ...

(iib) ...

(ii)in any other case - $1,000; and

(b)...

(4A)...

(5)A penalty for a breach of a term of an award or order may be sued for and recovered by:

(a)an inspector;

(b)a party to the award or order;

(c)an employer who is a member of an organisation and who is affected by the breach;

(ca)a person:

(i)whose employment is, or at the time of the breach was, subject to the award; and

(ii)who is affected by the breach;

(d)an organisation that is affected, or any of whose members are affected, by the breach; or

(e)an officer or employee of an organisation that is affected, or any of whose members are affected, by the breach where the officer or employee is authorised, under the rules of the organisation, to sue on behalf of the organisation.

(6)Where, in a proceeding against an employer under this section, it appears to the court concerned that an employee of the employer has not been paid an amount that the employer was required to pay under an award or order, the court may order the employer to pay to the employee the amount of the underpayment.

(6A)...

(6B)    ...

(7)An order shall not be made under subsection (6) or (6A) in relation to so much of an underpayment as relates to any period more than 6 years before the commencement of the proceeding.

(8)A proceeding under this section in relation to a breach of a term of an award or order shall be commenced not later than 6 years after the commission of the breach.

(9)..."

The applicants also rely on s.179(1) of the Act. This subsection provides that, where an employer is required by an award or order to pay an amount to an employee, the employee may sue for the amount of the payment in this Court or a court of competent jurisdiction.

The application for penalties

Most of the matters required to be established by the applicants, in order to make out a case for the imposition of penalties, were admitted on the pleadings.  At the hearing the respondents obtained leave to file an Amended Defence that admitted:  the registration of PKIU as an organisation of employees under the Act and its status as a party to the reinstatement award; Vista's incorporation and liability to be sued; the nature of Vista's business; the personal involvement of Mr McNamee in Vista's management; the employment by Vista before 4 March 1991 of the 28 individual applicants and its termination of their employment on that day; the making, and subsequent variation, of the reinstatement award and the various decisions of Senior Deputy President Macbean.  At the hearing the respondents made some other concessions:  that none of the persons listed in the Schedule to the reinstatement award had been reinstated and that both Vista and Mr McNamee were in breach of the bans clause; Vista to the dates of hearing, 21 and 22 November 1994 and Mr McNamee until he retired as a director on 12 October 1994.  As will be apparent, by the end of the hearing the applicants' penalty case was conceded.

Counsel for the applicants, Mr S Rothman and Mr R Reitano, put cumulative penalty claims. First, they said that Vista was in breach of the reinstatement award from the time it was made, on 18 December 1991, until the bans clause was inserted, on 19 November 1993. By virtue of subs.(2) of s.178, this was to be treated as a single breach of the award, in relation to which the maximum penalty is $1,000. They submitted that the circumstances of this case are particularly serious, that Vista deliberately chose not to comply with the award and maintained that position over a long time; Vista engaged in a "litany of delays" and remained defiant of the Commission notwithstanding the High Court's determination that the dispute was within its jurisdiction. They said there was no indication of contrition, even at the hearing of this case. The burden of Mr McNamee's evidence is that he ignored the award because it was more profitable to do so and because he thought the decision to make the award was wrong.

Mr C R Newlinds, counsel for the respondent, did not dispute his opponents' submissions.  But he made two pertinent points.  He pointed out that Mr McNamee had given evidence that Vista could not afford to make back payments of wages to 10 July 1991, even when the award was made on 18 December 1991.  And he said that the "litany of delays" referred to by the applicants' counsel was simply the product of Vista's decisions to exercise its legal rights.  Notwithstanding these addenda, he said it was hard for him to argue against imposition of the maximum penalty for this breach. 

I agree with counsel that the breach of the award from December 1991 to November 1993 warrants the imposition of the maximum penalty.  The breach was particularly serious.  It amounted to a deliberate defiance of the Commission's authority over a period of almost two years.  It is true that much of this time was occupied by proceedings in which Vista was challenging the Commission's jurisdiction; but two things need to be said about that.  First, if parties elect not to obey an order or award of the Commission because they are contesting jurisdiction, they do so at their own risk.  While I agree that a bona fide doubt about jurisdiction is a matter to be taken into account, if the doubt proves unfounded it cannot exculpate a person who defies an order or award on that ground.  Second, this is not a case where, once jurisdiction was finally determined, the employer promptly and faithfully complied with the award. If that had been done, a small penalty would suffice.  This is a case where the employer continued to defy the Commission even after the High Court had ruled on jurisdiction.  It is true that Vista immediately made an offer of new employment to the dismissed employees; but, in this particular case, that does not diminish its culpability.  Having regard to the nature of the offer, and Vista's behaviour at that time, it is fair to regard this as a mere charade.  Vista had no intention of re-establishing a genuine relationship with those people.

Mr McNamee's claim that Vista was unable to find the funds necessary to reinstate the dismissed employees as from 10 July 1991 requires consideration.  I should say that Mr Rothman objected to the admission of evidence about Vista's (or Mr McNamee's) financial position.  He said it was irrelevant.  But I ruled that it was relevant, at least in relation to the quantum of any penalty to be imposed on the respondents.  In determining what monetary penalty to impose on an offender it is usual for a court to take into account the offender's capacity to pay.  A monetary sum that would constitute a reasonable penalty to a person of average income might be unduly oppressive if imposed on an impecunious person. 

However, the evidence does not establish that the company was unable to find the back-pay in December 1991.  If Vista had reinstated the 28 individual applicants and paid them, at the base wage rate, for the period 10 July to 18 December 1991, the total cost would have been $309,856.  The company must have spent more than this in legal costs resisting reinstatement.

According to Mr McNamee the company continued to manufacture carbonless paper until October 1993.  The only financial figures in evidence are contained in copies of the company's filed Annual Returns for the financial years ended 30 June 1991 and 30 June 1992.  The 1991 return reveals total assets of $17,520,257, of which $13,030,793 represented non-current tangible assets; chiefly plant and equipment according to Mr McNamee.  The return also shows current liabilities of $2,623,120 and non-current liabilities of $14,976,424; but, without more information, I cannot assume they would have prevented the company raising the funds to meet the back-payments.  I note that the return states the company incurred liabilities of $17,415,842 as a trustee and is entitled to be indemnified in this amount out of trust assets.  The trust situation was not explained.

The 1992 return shows total assets of $20,111,000, of which $19,844,081 represented non-current tangible assets.  Total liabilities, current and non-current, amounted to $15,532,774, leaving a shareholders equity of $4,578,306.  These figures suggest that, as late as 30 June 1992, there would have been no difficulty in the company paying the back wages.  There is no evidence as to whether or not that was still the position at the date of the High Court's decision, 3 June 1993.  If it was not, this could have been demonstrated.  I am entitled to infer, from the fact that the respondents chose not to tender evidence concerning the company's financial position in 1993, that this would not have assisted their case.

I do not accept the claim that Vista did not reinstate because it could not afford to do so.  I think the reason was that Mr McNamee developed a stubborn determination not to take back employees towards whom he had become extremely hostile.  His dislike of, even contempt for, the dismissed employees is apparent, not only in the history of the matter but even from the terms of his affidavits in this case.  It seems not to have occurred to him that he was wrong, and had been unfair, even when Deputy President Riordan pointed this out in December 1991.  He was prepared to insist on having his own way even if this meant continued defiance of the Commission's authority.

Having regard to the whole of the relevant circumstances, I think it is appropriate to impose the maximum penalty of $1,000 in respect of the period up to the insertion into the award of the bans clause. 

Counsel for the applicants sought the imposition of daily penalties against both Vista and Mr McNamee in respect of the period after 29 November 1993.  As I understood them, they sought penalties up until the commencement of the hearing on 20 November 1994; but I would not be prepared to impose a daily penalty on Mr McNamee for the period after he retired as a director.  I do not know what influence he had on Vista's actions after his retirement as a director.  In support of their claims for daily penalties, counsel repeat the points already noted.  They concede there is evidence that Vista ceased the manufacture of carbonless paper in October 1993 but they say this does not establish that reinstatement was impracticable.  There is no evidence as to what other operations were feasible at that time.  They point out that the respondents could have sought a variation of the award on the ground of impracticability, if that were the situation; but no such application was ever made.

I accept these submissions.  Having regard to the respondents' failure to seek a variation on the ground of impracticability, or to put before me anything more than a general assertion of lack of means, I do not think I should act on the basis that this was the reason Mr McNamee did not cause the employees to be reinstated.  I think he was determined not to do so, come what may.  This conclusion is not vitiated by the strange events of March 1994; when the employees were reinstated and immediately terminated without even payment in lieu of notice, let alone back pay.

Counsel for the respondents conceded that, because of the terms of the bans clause and the combined effect of s.111(1)(e) and s.178(3)(b) of the Act, s.178(2) does not apply to his client's breaches after 29 November 1993. Accordingly, the Court may deal with the matter, if it thinks fit, on the basis that both respondents committed a fresh breach each and every day after 29 November 1993, for which a separate penalty may be imposed. He accepted that the relevant daily maximum is $500: see s.178(4)(a)(i) of the Act. But he submitted the Court should not impose daily penalties, but regard the whole episode as a single course of conduct. At the end of the day, he said, the Court should consider what total penalty is appropriate.

I accept that, in assessing whether or not to impose a daily penalty (and, if so, in what amount), it is proper to have regard to the total penal burden imposed on the respondents.  But this is clearly a case for a daily penalty.  By the date of the bans clause, there was no possible doubt about the Commission's jurisdiction or the validity or meaning of the reinstatement award.  No attempt was made to persuade Senior Deputy President Macbean that Vista lacked the means to comply with the award; and, therefore, that it would be futile or inappropriate to insert a bans clause.  When the clause was inserted, it was simply ignored.

I think it is open to me to impose a daily penalty on Vista right up to the date of the hearing.  However, having regard to my uncertainly as to the situation since Mr McNamee resigned as a director, I will not do so.  Neither will I impose a penalty at the maximum rate.  Notwithstanding the seriousness of the respondents' conduct, I take into account the fact that two respondents are to be penalised and the number of days involved.  I also take into account the order for payment of underpayments to be made against Vista.  I think an appropriate penalty is $100 per day for each respondent.  This is to apply in respect of the period 29 November 1993 to 12 October 1994, a period of 317 days.  The daily penalties payable by each respondent will amount to $31,700. 

In fixing the amount of the daily penalties, I have not overlooked the evidence given by Mr McNamee that suggests both he and Vista are now in a parlous financial position.  Mr McNamee said a meeting of his creditors had been called to consider a deed of arrangement, under Part X of the Bankruptcy Act 1966. His counsel, Mr Newlinds, tendered the Statement of Affairs prepared for that meeting. It shows a substantial excess of liabilities over assets. Most of the liabilities are for moneys said to be due under guarantees given by Mr McNamee. After the hearing, while judgment was reserved, Mr Newlinds informed me by letter that Mr McNamee had presented a debtor's petition in bankruptcy. Presumably the creditors' meeting rejected his proposal and he is now bankrupt.

In relation to Vista, Mr McNamee's evidence was that a receiver had been appointed, but the company disputed the validity of the security under which the appointment was made.  This dispute is scheduled to be heard in the Supreme Court of New South Wales next March.  I gather that the ability of the company to pay all its unsecured debts will depend on the outcome of this litigation.

While this evidence suggests that both Vista and Mr McNamee may have difficulty in paying penalties, I do not think I should allow it to deflect me from imposing whatever penalties are otherwise appropriate.  It is too early to say what will be the final position in relation to either the company or Mr McNamee.  If the company is successful in its challenge to the validity of the security, it seems there is every prospect of its meeting its obligations.  As to Mr McNamee, much will depend on the ability of the principal debtors, whose debts he has guaranteed, to meet their obligations.  Mr McNamee's affairs have not yet been independently investigated, so far as I know.  It is sometimes a mistake to take a Statement of Affairs at face value.  If the situation of either respondent proves as bad as suggested, relief is available under the relevant legislation. 

The penalties imposed on both respondents are to be paid within two months, or such further time as a Judge on application may allow.

Section 356 of the Industrial Relations Act empowers a court imposing a penalty under s.178, amongst other sections, to order that the penalty, or part of it, be paid into the Consolidated Revenue Fund or to a particular organisation or person. I think this is a case where an order should be made in favour of the relevant organisation, PKIU. As will be apparent from the foregoing narrative, the organisation has been put to considerable expense in seeking to protect the interests of members formerly employed by Vista. It should receive some recompense from whatever penalties are recovered against the parties who occasioned that expense. At the same time, it is apparent that Vista's conduct has caused considerable public expense. I think it would be fair if the recovered penalties were shared equally between PKIU and the general community. This can be achieved by an order that the Registrar pay to PKIU one half of all moneys paid by way of penalties and the other half into Consolidated Revenue.

Underpayments of employees

Counsel for the applicants said those of their clients who were named in the Schedule to the reinstatement award, the individual applicants, are entitled to an order against Vista under s.178(6) of the Industrial Relations Act because they were not paid money that Vista was required to pay under the award; namely, their wages from 10 July 1991 to date. However, for reasons that were not explained, they confined their claim to the period 10 July 1991 to 23 March 1994. Orders were sought only against Vista, and correctly so. Section 178(6) only authorises an order against "the employer".

The solicitor for the applicants, Robert McClelland, quantified his clients' claims by preparing a schedule in which he showed the average weekly wage, in the period 1 July 1990 to 4 March 1991, of each of the individual applicants and the sum that represented 139 times that weekly wage.  The period from 10 July 1991 to 23 March 1994 comprised 139 weeks.
The average weekly wage taken by Mr McClelland included overtime payments.  As I felt there may be a question whether "an amount that the employer was required to pay under (the) award" includes overtime, I requested Mr McClelland to carry out a similar exercise using each employee's weekly base wage.  He did this.  The relationship between the figures in the two schedules varies from one individual to another, but in most cases the figure calculated by reference to average weekly wages is 20-25% higher than that calculated by reference to the base rate. 

Mr Newlinds, for the respondents, accepted that s.178(6) applies to this case. But he said the subsection merely confers a discretion on the Court; it does not confer an entitlement to an order. There are reasons, according to him, why no order should be made in this case. Chief among them is evidence suggesting that all the dismissed employees received some income during the relevant period. It would be inequitable, he contended, to allow the dismissed employees a "windfall" by also making an order under s.178(6). Counsel said that, to make an order in favour of an employee who had not suffered a loss, would be to visit a penalty on the employer, additional to that provided by the earlier parts of s.178. Alternatively, he argued, the Court should take the other income into account in determining the quantum of an order under s.178(6), limiting it to the shortfall actually suffered by a particular applicant. So as to demonstrate what monies were received by particular applicants between 10 July 1991 and 23 March 1994, Mr Newlinds tendered a folder of documents pertaining to each applicant.

It is not necessary to set out the position in relation to each individual.  But I should indicate the sources of income they disclose.

First, it appears that PKIU made weekly sustenance payments to the dismissed employees who attended the picket line.  The evidence indicates that the amount paid to any particular person depended on the number of shifts during which he or she was on the picket line.  It does not indicate whether or not there was an agreement or understanding that payments would be refunded to the union if the member were successful in recovering wages from Vista.

Secondly, all the individual applicants received payments from the Department of Social Security, presumably unemployment benefits. So far as I am aware, they are not obliged to refund these payments if they receive payments under a s.178(6) order.

Thirdly, some applicants received superannuation fund payments.  The evidence does not disclose the source or nature of these payments.  They may have been payments of a capital nature, which it would be unfair to off-set against a claim to income.  The applicants may have been entitled to receive the payments, at some stage, in any event.  I think the superannuation payments should be disregarded.

Finally, some individuals received wages during the relevant period.  The evidence does not give much detail.  The tendered documents are mostly group certificates or income tax assessment notices.  Some applicants might have received wages from employment that was an alternative to their employment by Vista.  In other cases wages might have come from a "second job" and been received even if the employee had continued to be employed by Vista.  The available evidence does not enable one to say. 

In their reply, counsel for the applicants were inclined to concede that s.178(6) involved a discretion rather than an entitlement. But they said the only element of discretion was whether to make an order at all; if the Court decided to make an order, it had no discretion as to the amount. They pointed out that the discretionary power is to "order the employer to pay to the employee the amount of the underpayment", not part of that amount.

Both counsel sought to support their arguments by reference to s.179(1) of the Act. This subsection entitles an employee to sue an employer for a payment required to be made under an order or award. Counsel for the applicants said this provision is designed to complement s.178(6); s.178(6) being available in conjunction with a proceeding for a penalty and s.179(1) applying even where there was no such proceeding. It would be anomalous, they argued, if the two provisions differed in result; and s.179(1) clearly gives no discretion on quantum. Counsel for the respondent, on the other hand, contended that s.179(1) creates a right to "sue" for payments, and this "brings to mind concepts of common law breach of contract"; so it is legitimate to inquire what loss has actually been suffered and whether the applicants have mitigated their damage. He referred to Tasmanian Steamers Proprietary Limited v Lang (1938) 60 CLR 111. That was a constitutional case, the point at issue being the compatibility of New South Wales legislation requiring employees to deduct State income tax from employees' wages with the wage paying obligation imposed on employers by a federal award. The High Court of Australia (Latham CJ, Rich, Starke and McTiernan JJ, Dixon J dissenting) held there was no inconsistency in the two obligations. In giving their reasons, both Latham CJ and Dixon J referred to the possibility of there being a defence to an action for wages payable under an award. The relevant provision at that time, s.49A of the Commonwealth Conciliation and Arbitration Act 1904, allowed an employee entitled to the benefit of an award to sue for wages due under the award within nine months of them becoming payable. At 124 Latham CJ said:

"This section regards the obligation to pay wages under an award as an obligation which can be enforced in an ordinary way - in the same way as in the case of any other obligation to pay wages.  Prima facie, therefore, any defence applicable to an ordinary claim for wages would be open to the employer when he was so sued.  One defence would be actual payment.  Another defence would be tender.  These defences depend upon the common law.  Another defence would be payment to the agent of the employee, or payment to a person to whom the debt has been assigned.  These defences (except as to the definition of legal tender) would also depend upon law other than that contained in any Federal enactment.  So also if the amount due for wages had been garnisheed under the provisions of a State statute, there appears to be no reason to doubt that the employer, when sued by the employee for wages affected by the garnishee order, would have a good defence.  In the case of an assignment and in the case of garnishee proceedings, the employee does not actually receive the moneys representing the wages into his own hands, but he receives the full benefit of those moneys under the common law or the statutory law of a State."

Dixon J referred to Mallinson v The Scottish Australian Investment Company Limited (1920) 28 CLR 66 where, as he said at 135, the High Court decided "that a consequence of the statutory duty to observe an award enforceable by penal sanction was that the employer became the employee's debtor in respect of the prescribed wages". He went on:

"Sec. 49A of the Commonwealth Conciliation and Arbitration Act 1904-1934 now gives express effect to this implication and authorizes the employee to recover the wages thus 'becoming due to him' in any court of competent jurisdiction, always subject to a limitation of time. No doubt as a result of secs. 79 and 80 of the Judiciary Act 1903-1937, this civil remedy may be answered by any defence available under State law which is applicable and is consistent with Federal law. Under this head, set-off may be open. But the civil remedy is, so to speak, but a by-product of the provisions securing payment of the minimum wage. Thus no limitation upon the scope and operation of those provisions can be inferred from the incidents which may belong to the civil remedy by reason of secs. 79 and 80 of the Federal Judiciary Act.  Such a deduction would mean an inversion of the reasoning by which the civil remedy was evolved."

As I have indicated, Mr Newlinds accepted that s.178(6) was applicable to this case. Nonetheless, I have considered that matter myself. An order may be made under subs.(6) where it appears to the court that "an employer of the employee" has not paid an amount that the employer was required to pay under an award or order. In such a case the court may "order the employer to pay to the employee" the amount of the underpayment. The subsection is plainly concerned with a situation where money becomes payable pursuant to an award or order by virtue, and during the currency, of an employer-employee relationship. The monies sought in this case relate to a period after the purported dismissals of 4 March 1991. Can it be said that Vista was relevantly "the employer", and each of the applicants "the employee", at that time?

That this question should be answered in the affirmative is, I think, indicated by Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656. In that case the High Court considered the power of the AIRC to make a reinstatement award. At 660 their Honours commented that "an enforceable duty to reinstate in employment can only arise after employment has been terminated". They added: "As a general rule disputes as to reinstatement also arise after employment has been terminated". Yet at 664 they referred to the availability of s.123 of the Conciliation and Arbitration Act to an employee "to recover any payment due under an award". Section 123 was the immediate predecessor of s.179 of the Industrial Relations Act.  It was couched in similar terms.  Significantly, having regard to the context, the High Court Justices went on to say that:

"... if an award created an obligation on the part of an employer to reinstate a particular employee or a particular class of employees, that obligation would itself be enforceable only by imposition of penalty and recovery of payments due under the award."

The reason, presumably, is that the law treats as done that which ought to be done.  An employer directed to re-establish an employer-employee relationship with particular employees is to be treated by the law in the same way as if he or she has done so.

The other problem surrounding the application of s.178(6) is that already mentioned: whether the Court is entitled or obliged to take into account other income received by an employee in determining whether to order payment by an employer of an underpayment and, if a payment is to be ordered, the amount thereof.

I accept that the word "may" confers on the Court a discretion whether or not to order payment of an underpayment: see s.33A(2A) of the Acts Interpretation Act 1901. Section 178(6) does not prescribe criteria for the exercise of this discretion; so the Court must exercise it by reference to the scope and purpose of the legislation. Plainly, the purpose of s.178(6) is to facilitate the payment to employees of unpaid award benefits. Unlike the earlier provisions of s.178, the subsection is not penal in character. Accordingly, the extent of the employee's loss must always be a relevant consideration, in determining whether or not to make an order for payment of the underpayment. Where there is no significant loss, notwithstanding the employer's failure to comply with the award, the Court might justifiably decline an order.

However, I accept Mr Rothman's submission that the subsection gives no discretion as to the quantum of the order.  The Court may or may not make the order, but its nature is specified.  It is an order "to pay to the employee the amount of the underpayment"; not part of the amount of the underpayment.  Once the Court decides that, having regard to all relevant factors and as an exercise of discretion, it ought to make an order for payment, it has no choice other than to make an order extending to the whole of the underpayment.

I do not think Tasmanian Steamers prevents this conclusion. All the defences mentioned by Latham CJ and Dixon J were defences that assumed the employee was originally entitled to the money claimed. The question was whether the employee's claim to judgment for that sum might be met by a defence of confession and avoidance, to use old fashioned pleading parlance: that the money had been paid or tendered (Latham CJ) or was subject to a set-off (Dixon J). Their Honours said nothing to suggest the availability of a defence in bar of the claim; for example, that the amount recoverable under s.49A of the Commonwealth Conciliation and Arbitration Act was to be reduced by any moneys employees received from another source, or might have received if they had taken steps to mitigate their damage.

In the present case, I think I should make an order in favour of all 28 individual applicants. No relevant distinction is to be made between them. It is true that some of them earned some wages over the material period. But it is not possible to determine to what extent, if at all, these earnings were a replacement of wages that would have been derived from Vista if the reinstatement award had been obeyed. In considering whether or not to make an order under s.178(6), I take into account the payments received from the Department of Social Security. But I do not give those payments much weight. There is a problem of principle in doing so. Persons the subject of a reinstatement award will usually have received social security payments. To treat this as an answer to a s.178(6) claim would be to allow employers a general escape from their obligations. In any event, in the present cases, the payments are small, at least by comparison with the moneys due to the applicants under the award.

Consistently with the tentative view I expressed during the hearing, I propose to assess the amount payable to each applicant by reference to his or her base weekly wage rate at 4 March 1991, not the weekly wage, including overtime, that he or she actually received.  To the extent of the difference, the employee is worse off than if the dismissals had not occurred.  Moreover, an assessment based on wages payable at 4 March 1991 allows nothing for rises in wage rates over the three years and nine months that have since elapsed.  These are further reasons why it would be wrong to place much weight on the fact that the applicants have received some other income in the meantime.  The amount payable to each individual applicant will be that calculated by Mr McClelland in respect of that applicant in ex G: 

Kim Wilkinson       $64,774

Barry Winmill       $66,720
          Roy Walker     $66,720
          Nestor Tan     $64,774
          Charles Smith       $70,612
          Rayner Ruditsch     $64,774
          John Robertson      $64,774
          Dennis Powell       $68,944
          Robert Nicholls     $66,720
          James Moir     $66,720
          Malcolm McDonald     $64,774
          Donald McArthur     $69,361
          Bruce Marheine      $64,357
          Alwyn Mallitt       $64,357
          Chan Leong     $66,720
          John Kemp           $69,500
          John Jenkins        $72,836
          Roland Hill         $70,612
          Gregory Hayward     $68,805
          Maxwell Hayward     $66,859
          John Forrest        $67,832
          Laurie Camenzuli     $66,859
          Ronald Broom        $64,357
          Bruno Broesel       $64,774
          James Benton        $68,805
          John Becus     $64,774
          George Anderson     $64,774
          William Banks       $66,720

I propose to order that Vista pay each of the listed applicants the amount shown opposite his or her name within two months, or such further period as a Judge on application may allow.

I certify that this and the preceding forty-six (46) pages
are a true copy of the Reasons for Judgment
of the Honourable Chief Justice Wilcox.

Associate:

Dated:   14 December 1994

APPEARANCES

Counsel for the Applicant:          S C Rothman and R Reitano

Solicitors for the Applicant:       Turner Freeman

Counsel for the Respondent:         C R Newlinds

Solicitor for the Respondent:       Donna Taylor

Dates of hearing:                   21-22 November 1994