Smith v Granada Tavern and Ors (No.3)
[2007] FMCA 1548
•19 September 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SMITH v GRANADA TAVERN & ORS (No.3) | [2007] FMCA 1548 |
| INDUSTRIAL LAW – Imposition of penalty where finding of duress – consideration of matters relevant to penalty – accessorial liability. |
| Workplace Relations Act 1996 (Cth), s.400(5) |
| FSU v Commonwealth Bank of Australia [2005] FCA 1847 Kelly v Fitzpatrick [2007] FCA 1080 Canturi v Sita Coaches Pty Ltd [2002] FCA 349 Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 40 |
| Applicant: | INSPECTOR RAYMOND MURRAY SMITH |
| First Respondent: | ACN 090 444 518 PTY LTD T/AS GRANADA TAVERN |
| Second Respondent: | MICHAEL DAVID HIBBERD |
| Third Respondent: | JOCELYN MAREE BERECHREE |
| File number: | LNG 39 of 2006 |
| Judgment of: | Burchardt FM |
| Hearing date: | 2 July 2007 |
| Date of last submission: | 2 July 2007 |
| Delivered at: | Melbourne (and by video link to Hobart) |
| Delivered on: | 19 September 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Bourke & Mr M. Felman |
| Solicitors for the Applicant: | Clayton Utz Lawyers |
| Counsel for the First & Second Respondents: | Mr N.J. Clelland SC |
| Solicitors for the First & Second Respondents: | Simmons Wolfhagen |
| Counsel for the Third Respondent: | Ms K. Baumeler |
| Solicitors for the Third Respondent: | Butler, McIntyre & Butler |
ORDERS
That the First Respondent pay to the consolidated revenue fund by way of penalty $24,750.00.
That the Second Respondent pay to the consolidated revenue fund by way of penalty $4,950.00.
That the Third Respondent pay to the consolidated revenue fund by way of penalty $1,980.00.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
LNG 39 of 2006
| INSPECTOR RAYMOND MURRAY SMITH |
Applicant
And
| A.C.N. 090 444 518 PTY LTD T/AS GRANADA TAVERN |
First Respondent
| MICHAEL DAVID HIBBERD |
Second Respondent
| JOCELYN MAREE BERECHREE |
Third Respondent
REASONS FOR JUDGMENT
On 19 June 2007 I declared that each of the Respondents had contravened s.400(5) of the Workplace Relations Act 1996 (Cth)
(“the Act”) and gave my reasons for doing so.
The only matter still outstanding is what, if any, penalties I should impose on the three Respondents because of the duress that I have held they applied to Emily Wills, an employee of Granada Tavern in 2006.
Inspector Smith submitted that I should impose a penalty of 90 per cent of the applicable maximum on Granada Tavern and Michael Hibberd and a penalty of 50 per cent of the applicable maximum upon
Ms Berechree. The maximum for Granada Tavern is $33,000.00, and for the others it is $6,600.00.
Counsel for Granada Tavern and Mr Hibberd submitted that no penalty should be imposed on Granada Tavern and a relatively light penalty upon Mr Hibberd.
Counsel for Ms Berechree urged me to impose no financial penalty upon Ms Berechree at all.
For the reasons that follow I regard the conduct of the Respondents as being serious in character and such as to justify the imposition of a penalty on each of the Respondents.
It is not necessary to traverse again all the findings I made in my reasons for judgment. The following paraphrase gives some idea of what it was all about. In 2006 Granada Tavern, through Mr Hibberd became aware that the Australian Workplace Agreements (AWAs) previously in place for some considerable time were not valid.
Mr Hibberd wanted to get AWAs in place to avoid award obligations that would otherwise obtain. His desire to do so was plainly interrelated with a fear of underpayment claims which he sought in part to avoid by including a draft deed of release when he first met his employees to discuss the possibility of a new AWA.
Mr Hibberd and Ms Berechree realised at a very early stage that
Ms Wills might be a problem in relation to signing an AWA. They rapidly came to the view that Ms Wills was a ringleader of employee resistance to the signing of AWAs.
When Ms Wills unequivocally indicated that she wished to be paid as the award required, her shiftwork pattern, which had been in place for a long time and was known to be congenial to her, was removed from her as part of the pressure put upon her to sign the AWA.
Mr Hibberd, as part of the pressure brought to bear upon Ms Wills, sought to indicate to Ms Wills and others that those who did not sign the AWA would have the issue of poor performance raised against them, when their performance did not justify such an approach.
Mr Hibberd behaved throughout in a domineering fashion and suggested to Ms Wills that he was in a position to control the outcome of any litigation and he further indicated that he might not be truthful in so doing. Mr Hibberd further involved Ms Berechree in the reduction of hours of Ms Wills and thus in the pressure upon Ms Wills to sign the AWA.
This conduct took place over a period of about two months. It also involved Mr Hibberd’s reference to running the Granada Tavern like a concentration camp if the AWAs were not signed.
The above is only a digest of the relevant findings but gives a clear indication as to why I regard the conduct of the Respondents as being significant. It should be noted further that Ms Wills was a young woman, a casual employee who needed the money from her work and who was at all times in a very significantly disadvantaged position, as compared to Mr Hibberd, who was a part‑owner of the company for which she worked, and Ms Berechree, who was its manager.
The Respondents have expressed no contrition for the offending conduct nor any contrition for the stress imposed on Ms Wills by the trial process. Ms Wills was cross‑examined for some 80 pages of transcript.
Against this, counsel for the First and Second Respondents pointed to the fact that this was a first transgression by the Respondents, the obloquy of the finding of duress against the Respondents, particularly in a relatively small community such as Hobart, the alleged absence of evidence of any necessity for specific deterrence in respect of the Respondents and the unique circumstances of the case which were said to make considerations of general deterrence inappropriate.
Counsel for the First and Second Respondents also pointed to the good character of the Respondents, in particular that of Mr Hibberd, and counsel for Ms Berechree pointed to the likely difficulties she would face because of the findings made.
Notwithstanding these submissions, in my opinion, the conduct of the Respondents as disclosed in my earlier reasons for judgment and outlined above was egregious. It was intended to and I have no doubt did place a great deal of strain on a young woman in a completely disempowered situation. That she was able to stick up for herself is to her credit and not that of the Respondents.
The scheme of the legislation is one in which general deterrence is significant. General deterrence has been referred to by Merkel J in FSU v Commonwealth Bank of Australia [2005] FCA 1847 at [41] – [43]. I should impose a penalty that deters not only Granada Tavern but other employers and their directors and managers from the sort of conduct that I have found to have taken place in this case.
Granada Tavern and Mr Hibberd
These Respondents submitted that there should be no penalty imposed upon the corporation because its liability was purely accessorial, in the sense that it was conducted by Mr Hibberd alone.
The Respondents placed reliance upon the decision of Ryan J in
Canturi v Sita Coaches Pty Ltd[2002] FCA 349 (“Sita”) in this regard. In that case Ryan J was concerned with a company of which an individual, Mr Sita, was the moving spirit behind the contraventions, which he did as the agent of the two companies involved in that case. Ryan J imposed a penalty only on the two companies.
The analogy sought to be drawn here was that in effect it was only the actions of the one party, namely Mr Hibberd, and therefore a penalty should be imposed only upon him.
There is nothing in the Act which suggests that proprietary limited companies and their directors cannot both be made liable for penalties in these sorts of circumstances. The facts in Sita were different. Not only was the penalty imposed on the company and not the individual, contrary to the position contended for here, but in that case the finding made by Ryan J was that Mr Sita was the sole person involved. He was the sole controller of the company, as I understand Ryan J's decision.
Here, the position is more opaque. Not only was there active involvement by other persons, including Ms Berechree, in the conduct that contravened the legislation, but the Granada Tavern has another co‑owner, Mr Prescott. While as I have already found, Mr Hibberd was the moving force in the conduct of the Respondents that gave rise to this proceeding, counsel for the First and Second Respondents in submissions on 2 July 2007 stated at (P-11):
“I am instructed that the First Respondent, as part of the Hibberd and Prescott Group is now well and truly informed about requirements in relation to AWAs... The group operates three hotels and employs approximately 120 people. Mr Hibberd and Mr Prescott came into the industry some 10 years ago and they have employed, as one might expect over the last 10 years, a large number of Tasmanian residents.”
It is apparent from that extract that Mr Prescott is certainly no mere cipher.
Even if this was not the case and Mr Hibberd was the sole owner of Granada Tavern, I would regard it as appropriate to discourage the corporation from any further misconduct. I would have imposed the penalty on the corporate entity as Ryan J did in Sita, in any event. In my view, however, the circumstances taken as a whole make it appropriate that both the corporation and Mr Hibberd face a penalty.
In Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 40,161 at 40,165 Burchett J said:
“It cannot be denied that the fixing of the quantum of the penalty is not an exact science. It is not done by the application of a formula, and within a certain range, courts have always recognised that one precise figure cannot be incontestably set to be preferable to another.”
I have taken into account the objects of the legislation, including relevantly the intention that parties negotiate AWAs free from duress, the fact that certainly at the Granada Tavern a large number of young people like Ms Wills are employed from time to time - and I would be prepared to go so far as to infer that this is not uncommonly the case in other taverns, both in Tasmania and elsewhere - and the desirability of protecting young employees generally. I have had regard to all the conduct of the Respondents. In my view, both Granada Tavern and
Mr Hibberd should pay a penalty of 75 per cent of the applicable maximum, i.e. $24,750.00 for Granada Tavern and $4,950.00 for
Mr Hibberd.
Ms Berechree
Ms Berechree falls to be considered in another light. She was at all times a subordinate employee. Although, for the reasons I have expressed, I have no doubt that her conduct contravened the legislation, it involved only one act in the chain of acts that constituted duress applied to Emily Wills. For the reasons I have already expressed in my earlier reasons for judgment, I have no doubt that this was because
Mr Hibberd told her to do it. I do not accept that this was not an order she could overcome. She could have refused to break the law. She has to face the consequences of her own unlawful conduct.
I note, however, that Ms Berechree, unlike the other Respondents, did not stand to gain directly from her conduct. She has suffered the embarrassment, like Mr Hibberd, of exposure within the community. I accept that the decision I make may have effects upon her holding of a gaming licence, although it is not clear that that will necessarily be the case.
In all the circumstances, in my opinion, Ms Berechree should be the subject of a penalty of $1,980.00.
Inspector Smith seeks that the penalties I impose ought to be paid to the Commonwealth, and I will so Order.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Brooke Evans
Date: 19 September 2007
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