Sims v Goldbush Holdings Pty Ltd
[2009] FMCA 756
•3 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SIMS v GOLDBUSH HOLDINGS PTY LTD | [2009] FMCA 756 |
| INDUSTRIAL LAW – Penalty – consideration of factors relevant to penalty. |
| Notional Agreement Preserving a State Award derived from the Plaster, Plasterglass and Cement Workers’ Award Number A29 of 1989, cls.18(7) and 28(2)(a) Workplace Relations Act 1996 (Cth), ss.661, 665(7), 719(6) and (7) Workplace Relations Amendment (Work Choices) Act 2005 |
| Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 CFMEU v Austral Bricks (Qld) Pty Ltd (2009) 178 IR 470 at 490; (2009) 224 FLR 178; [2009] FMCA 143 Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329; [2007] FCAFC 18 Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467 at 487 per Merkel J; [2005] FCA 1847 Hanssen Pty Ltd v Jones (2009) 179 IR 57; [2009] FCA 192 Jones v Hanssen Pty Ltd [2008] FMCA 291 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337; [2008] FMCA 1392 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170 Workplace Ombudsman v Golden Maple Pty Ltd [2009] FMCA 664 |
| Applicant: | ROBERT SIMS |
| Respondent: | GOLDBUSH HOLDINGS PTY LTD |
| File Number: | PEG 22 of 2009 |
| Judgment of: | Lucev FM |
| Hearing date: | 3 August 2009 |
| Date of Last Submission: | 3 August 2009 |
| Delivered at: | Perth |
| Delivered on: | 3 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Nicholas |
| Representatives for the Applicant: | Construction, Forestry, Mining and Energy Union |
| Respondent: | No appearance |
ORDERS
The respondent pay:
(a)a penalty of $12,000 for breach of cl.18(7) of the Notional Agreement Preserving a State Award derived from the Plaster, Plasterglass and Cement Workers’ Award No. A29 of 1989 (“NAPSA”); and
(b)a penalty of $12,000 for breach of cl.28(2)(a) of the NAPSA.
The penalty is to be paid to the Construction, Forestry, Mining and Energy Union by 4:00pm on 4 September 2009.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 22 of 2009
| ROBERT SIMS |
Applicant
And
| GOLDBUSH HOLDINGS PTY LTD |
Respondent
REASONS FOR JUDGMENT
(Ex tempore reasons revised from the transcript)
Introduction and background facts
In undefended proceedings on 16 July 2009, the Court declared that:
2. The respondent has breached:
(a) section 661 of the Workplace Relations Act 1996 (Cth);
(b) clause 18(7) of the Notional Agreement Preserving a State Award derived from the Plaster, Plasterglass and Cement Workers’ Award Number A29 of 1989 (“the NAPSA”); and
(c) clause 28(2)(a) of the NAPSA.
The Court made orders under s.665(7) of the Workplace Relations Act 1996 (Cth),[1] for the payment of certain moneys as damages for breach of s.661 of the WR Act. No penalty applies in respect of that matter.
[1] “WR Act”.
Orders were also made that:
4. Under section 719(6) of the WR Act the respondent pay the applicant $1.096.57 for unpaid annual leave in breach of clause 18(7) of the NAPSA.
5. Under section 719(7) of the WR Act the respondent pay the applicant $1,359.81 for unpaid superannuation in breach of clause 28(2)(a) of the NAPSA.
Provision was also made in the orders issued by the Court on 16 July 2009 for a penalty hearing today and for the filing of further affidavit material and submissions by both parties. The respondent has not attended today and it has not attended previous hearings before this Court. The Court is satisfied that the respondent was made aware of this hearing today, it having been served, by means specified by the Court, with a copy of the orders of 16 July 2009.[2] The Court can also indicate that the Court forwarded a separate copy of a notice of hearing for today, to a facsimile number which had been used to send correspondence to the respondent.
[2] See the Affidavit of Shannon Walker filed on 16 July 2009, an articled clerk in the employ of the Construction, Forestry, Mining and Energy Union (“CFMEU”).
Assessment of penalty
The Court had the assistance today of submissions from Mr Nicholas, who appears as counsel for the applicant. Based on a series of decided cases in the Federal Court and this Court, there is no real dispute about the relevant considerations for assessment of penalty. The following are a non-exhaustive list of factors to be considered:
a)the circumstances of the conduct (including deliberate defiance or disregard of the WR Act);
b)the relevant record of civil penalty contraventions;
c)whether the contraventions are distinct or arise from a single course of conduct;
d)the consequences of the contravening conduct;
e)deterrence, both general and specific;
f)the objects of the WR Act;
g)the size and financial resources of the contravener;
h)co-operation with regulatory authorities;
i)the contravener’s contrition;
j)the size of the prescribed penalty, and any recent increases to that prescription; and
k)the totality principle.[3]
Circumstances of the conduct, consequences of the contravening conduct and the objects of the WR Act
[3] Kelly v Fitzpatrick (2007) 166 IR 14 at 18 per Tracey J; [2007] FCA 1080 at para.14 per Tracey J; Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Workplace Ombudsman v Golden Maple Pty Ltd [2009] FMCA 664 at para.10 per Lucev FM (“Golden Maple”); Jones v Hanssen [2008] FMCA 291 at para.6 per Lucev FM; Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337 at 346-347 per Lucev FM; [2008] FMCA 1392 at para.34 per Lucev FM (“Sterling Crown”).
In relation to the circumstances and consequences of contravening conduct and the objects of the WR Act in this matter, the Court refers to the affidavit of the applicant, Mr Sims, which sets out the circumstances in which the relevant contraventions occurred.[4] It is unnecessary to deal with it in any detail but it suffices to say that the applicant was employed by the respondent in September of 2008 to do supervisory work in the building and construction industry.[5] He was employed supervising up to five other employees, doing general on-site work.[6] He worked not less than 38 hours per week.[7] He was paid $1000 a week clear after tax or $200 a day for weeks in which he did not work the full week,[8] and he was paid weekly in arrears.[9]
[4] Affidavit of Robert Sims sworn 24 February 2009 (“Affidavit of Robert Sims”).
[5] Affidavit of Robert Sims at para.3.
[6] Affidavit of Robert Sims at para.6.
[7] Affidavit of Robert Sims at para.7.
[8] Affidavit of Robert Sims at para.8.
[9] Affidavit of Robert Sims at para.10.
Mr Sims’ services were terminated on 5 December 2008 in the course of an afternoon, after he had been employed for almost three months, when he was advised that the respondent was shutting down and that he was being made redundant.[10] Mr Sims received no payment for his last day at work, he says he received no payment in lieu of notice, never received any superannuation payments, or proportionate leave on termination, or a separation certificate.[11] There is nothing to the contrary put by the respondent, there being no evidence led by the respondent in any of the proceedings before the Court.
[10] Affidavit of Robert Sims at para.12.
[11] Affidavit of Robert Sims at paras.13-17. Some of these matters are dealt with in previous orders of this Court.
The breach of the NAPSA is a serious breach. It involves unpaid entitlements, to which the applicant was entitled. It appears that the non-payment was deliberate. There is certainly no evidence to the contrary. The breach involved senior management of the company concerned, the evidence being that Mr Harvey, who recruited Mr Sims and who apparently terminated him, is the owner and sole director and shareholder of the respondent company. However, there does not appear to be anything malicious in the circumstances and as Mr Nicholas rightly conceded in his submissions, there do not appear to be any particularly aggravating circumstances. Having said that, it is appropriate to note that the conduct of the respondent does breach the objects of the WR Act and, in particular, those objects which seek to protect the entitlements of employees and provide safety nets, whether by way of minimum entitlements or award provisions.
In terms of the circumstances, the breaches of the NAPSA concerned do concern a sum of money which, whilst probably significant for Mr Sims, is not in the overall scheme of things inordinately large; being slightly less than $2,500 in total.
Relevant record of civil penalty contraventions
There is no evidence of the respondent being anything other than a first time contravener and in the absence of any particularly aggravating circumstances that would normally entitle the respondent to a 20 to 30 per cent discount on penalty.
Whether the contraventions are distinct or arise from a single course of conduct
The two breaches of separate provisions of the NAPSA, provided for under two separate subsections of s.719 of the WR Act, and the two separate clauses of the NAPSA, do constitute separate breaches of dissimilar terms of the NAPSA and cannot therefore be considered as a single breach.[12]
[12] Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at 367-368 per Gray J; [2008] FCAFC 170 at paras.33-34 per Gray J; Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503.
There are, therefore, two courses of conduct, which have to be taken account of in this matter, resulting in two separate breaches.
Size and financial resources of the contravener
There is minimal information about the size and financial resources of the contravener. Mr Sims, in his affidavit, provides some information which would indicate that this is a relatively small construction enterprise which, during the period of Mr Sims’ employment, employed up to five other employees whom he was required to supervise. The business was conducted by a sole director and shareholder, the owner, Mr Harvey. There is evidence in Mr Sims’ affidavit that he was told that the business was shutting down and he was being made redundant.[13] From that one might infer that the financial circumstances at that time, which was December 2008, were not necessarily the best.
[13] Affidavit of Robert Sims at para.12.
However, the affidavit does go on to point out that at the time of its swearing, which was in late February 2009, the business continued to operate. That it continued to operate is also evident from the fact that there has been the affidavit material that indicates service of various documents by email and facsimile, and some personal contact between Mr Harvey and the solicitors for the applicant. It is also apparent from the Court record that Mr Harvey attended a mediation before Registrar Stanley on 24 April 2009.
In setting penalty the Court has regard for the fact that no employer is entitled, by reason of their size, to avoid their obligations, but the Court must nevertheless have regard to whether or not there is any evidence of financial difficulty and must not impose a penalty which is crushing to the extent that it might result in the loss of employment or result in the imposition of a penalty which is futile.[14]
[14] See Golden Maple at para.71 per Lucev FM and Sterling Crown IR at 356 per Lucev FM; FMCA at para.75 per Lucev FM.
In the circumstances of this case, however, there is no evidence that the imposition of an appropriate penalty, that is, a penalty appropriate to the nature of the contravention and the size of the employer, would have any deleterious effect upon the respondent.
Co-operation with regulatory authorities
In relation to co-operation, this is a case in which, for practical purposes, the CFMEU, which sits behind the applicant and acts for the applicant, stands in the notional shoes of a regulatory authority.[15] There is some evidence of co-operation up to the point of a mediation, which was conducted before Registrar Stanley on 24 April 2009. There is no affidavit evidence, but counsel for the applicant informs the Court and the Court accepts, that the matter did notionally settle at mediation and that, indeed, is reflected in the report of listing completed on behalf of Registrar Stanley on 24 April 2009, which indicates that the matter had settled and the parties were to file consent orders.
[15] CFMEU v Austral Bricks (Qld) Pty Ltd (2009) 178 IR 470 at 480 per Wilson FM; (2009) 224 FLR 178 at 188 per Wilson FM; [2009] FMCA 143 at para.42 per Wilson FM.
To that point, therefore, the respondent might be given some credit for co-operation, but from that point onwards there has been and is no evidence of co-operation, to the extent that the mediation, which notionally settled, has not borne fruit. It might be inferred that there is some evidence of obstruction and there is certainly no basis on which the Court can discount the penalty for co-operation, post the mediation in April 2009.
The contravener’s contrition
Likewise, there is simply no evidence of contrition warranting a discount in the penalty.
The size of the prescribed penalty, and any recent increases to that prescription
The Court also has to have regard to the fact that relatively recently, that is in 2005, the Federal Parliament significantly increased the penalties for breach of federal workplace relations law.[16] Workplace relations law breaches are no longer to be approached with a light hand.[17]
[16] Workplace Relations Amendment (Work Choices) Act 2005.
[17] Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 224 ALR 467 at 487 per Merkel J; [2005] FCA 1847 at para.72 per Merkel J; Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329; [2007] FCAFC 18; Sterling Crown IR at 346 and 351; FMCA at paras.32-33 and 54 per Lucev FM.
Deterrence, both general and specific
The Court is also cognisant of the need for general and specific deterrence, in relation to the circumstances of this case. General deterrence is important here because of the nature of the conduct, being a breach of entitlements to which Mr Sims had an entitlement under the provisions of the NAPSA. It is also important having regard to the fact that the non-payments of those entitlements should see an appropriate message sent to the community and employers that the courts do not approve of that type of conduct and that an appropriate penalty should be set to discourage that kind of conduct.
With respect to specific deterrence, the Court notes lack of contrition, lack of co-operation, and the fact that the business does appear to be ongoing. In those circumstances there must be a penalty which appropriately reflects the need for specific deterrence.
Consideration of factors
On a consideration of all the factors the Court considers that the respondent is entitled to a discount, for it being a first-time contravener, to some consideration for the fact that it is a relatively small business and that the amounts concerned are not large. The Court thinks that a discount in the range of 40 to 60 per cent of each penalty would be appropriate.
It is necessary, however, as the Federal Court has pointed out in the Hanssen Appeal, to consider each penalty separately. [18] However, both of the penalties here are similar in that they are a breach of an entitlement provision of a NAPSA and in both cases they are for relatively similar amounts, one being slightly over $1,000, the other slightly over $1,350. In those circumstances there is no reason, in the Court’s view, to particularly distinguish between them, in terms of the quantum of penalty.
[18] Hanssen Pty Ltd v Jones (2009) 179 IR 57 at 74 per Siopis J; [2009] FCA 192 at para.97 per Siopis J.
Having regard also to the lack of contrition and co-operation, and the need for general and specific deterrence, the Court does not consider that a penalty at the minimum of the range that is indicated would be appropriate to be set and therefore sets a penalty at 45 per cent of the maximum for each breach. The maximum penalty is $33,000 and that would result in a penalty of $14,850 for each breach or $29,700 in total.
Totality principle
The totality principle has to be applied to that sum ($29,700) and that involves a last look by way of review, having regard to a process which is essentially that of instinctive synthesis of the totality of the penalties to be applied.[19]
[19] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 567-568 per Gray J and 577 per Graham J; [2008] FCAFC 8 at paras.27-28 per Gray J and para.78 per Graham J.
In this case the penalties, as the Court has considered and calculated them, would result in a total penalty of $29,700 for the two contraventions. Instinctively, the Court thinks that for two contraventions for a sum of around $2,500, and that notwithstanding all the circumstances which have been considered by the Court, that that penalty is high and ought to be reduced by application of the totality principle to $24,000.
Conclusion and orders
There will therefore be an order that each penalty will be reduced. There will be an order that in relation to each breach there be a penalty of $12,000, giving a total of $24,000 in total.
There will be further orders that that sum of money be paid to the CFMEU and the Court will order that that penalty be paid by 4pm on 4 September 2009.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Lucev FM
Deputy Associate: Susan Dinon
Date: 10 August 2009
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