Symons v Paperless Warehousing Pty Limited (No 2)
[2022] FedCFamC2G 504
Federal Circuit and Family Court of Australia
(DIVISION 2)
Symons v Paperless Warehousing Pty Limited (No 2) [2022] FedCFamC2G 504
File number(s): SYG 1352 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 24 June 2022 Catchwords: INDUSTRIAL LAW – assessment of pecuniary penalties for a contravention of s 44(1) of the Fair Work Act 2009 (Cth) – whether the judgments in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 have altered the principles for assessing penalties – penalties assessed.
COSTS – whether respondents acted unreasonably in relation to purported offer of settlement – application for costs dismissed.
Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 44(1), 119, 349(1), 539(1), 539(2), 545(2), 546, 557A
Trade Practices Act 1974 (Cth) s 76
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194; [2000] HCA 47
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 97
Kelly v Fitzpatrick [2007] FCA 1080
Mathers & Anor v Commonwealth of Australia [2004] FCA 217
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
Symons v Paperless Warehousing Pty Limited [2022] FedCFamC2G 93
The Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Division: Fair Work Number of paragraphs: 49 Date of hearing: 1 June 2022 Place: Sydney Counsel for the Applicant: Mr I Latham Solicitor for the Applicant: Gillis Delaney Lawyers Counsel for the Respondents: Mr M Seck Solicitor for the Respondents: Barry.Nilsson. Lawyers ORDERS
SYG 1352 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: SCOTT WILLIAM SYMONS
Applicant
AND: PAPERLESS WAREHOUSING PTY LIMITED ACN 000 800 617
First Respondent
MATTHEW JOHN VERCOE
Second Respondent
PAUL ANDREW FINK
Fourth Respondent
order made by:
JUDGE MANOUSARIDIS
DATE OF ORDER:
24 June 2022
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay a pecuniary penalty in the sum of $12,000.
2.Pursuant to s 546(3)(c) of the FW Act the first respondent pay the pecuniary penalty referred to in order 1 to the applicant.
3.The first respondent pay the pecuniary penalty referred to in order 1 within 28 days after the day on which these orders are pronounced.
4.Pursuant to s 546(1) of the FW Act the second respondent pay a pecuniary penalty in the sum of $2,400.
5.Pursuant to s 546(3)(c) of the FW Act the second respondent pay the pecuniary penalty referred to in order 4 to the applicant.
6.The second respondent pay the pecuniary penalty referred to in order 4 within 28 days after the day on which these orders are pronounced.
7.The applicant’s application for costs is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
introduction
On 21 February 2022 I published reasons for judgment (earlier reasons) on the basis of which I made declarations that the first respondent (PW) contravened s 44(1) of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay to the applicant, Mr Symons, redundancy pay to which he became entitled under s 119(1)(a) of the FW Act, and that the second respondent, Mr Vercoe, was involved in PW’s contravention and, for that reason, is taken to have contravened s 44(1) of the FW Act.[1] I also ordered that the proceeding be listed for directions in relation to penalty, and in relation to orders I should make to give effect to my reasons for judgment.
[1] Symons v Paperless Warehousing Pty Limited [2022] FedCFamC2G 93
On 18 March 2022 I made an order under s 545(2) of the FW Act that PW and Mr Vercoe pay Mr Symons compensation in the sum of $62,988.46, together with interest of $7,578.52; and on 23 May 2022 I set the matter down on 1 June 2022 to hear submissions on penalty and costs.
In these reasons for judgment, I assess the penalties in relation to PW’s and Mr Vercoe’s contraventions of s 44(1) of the FW Act, and whether, as Mr Symons submits, I should order that PW and Mr Vercoe pay his costs.
Power
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 44(1) is in column 1 of the table to s 539(2) of the FW Act.
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”.
The maximum penalty units for a contravention of s 44(1) of the FW Act at the relevant time of the contravention are 60 penalty units for an individual, and 300 for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that a “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 22 November 2019 was $210. Thus, $63,000 is the maximum penalty PW may be ordered to pay for its contravention of s 44(1) of the FW Act, and $12,600 is the maximum penalty Mr Vercoe may be ordered to pay for his involvement in PW’s contravention of s 44(1) of the FW Act.
principles
Counsel for Mr Symons submitted that the judgment of the plurality in Australian Building and Construction Commissioner v Pattinson has fundamentally changed the principles for assessing penalties under s 546 of the FW Act.[2] Counsel submitted that the only factors that may be taken into account when assessing a penalty for the contravention of a civil remedy provision of the FW Act are those that are relevant to deterrence. Counsel further submitted that the objective seriousness of the contravention in question, and the subjective circumstances of the contravenor, other than to the extent they bear on deterrence, are not relevant to assessing penalty. Counsel for PW and Mr Vercoe submitted that the judgments in Pattinson “have changed the landscape” in relation to the assessment of penalties.
[2] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
These submissions require me to consider the plurality’s judgment in Pattinson, and whether they have brought any substantial change to the principles that govern the assessment of pecuniary penalties a court may order under s 546(1) of the FW Act.
The plurality’s judgment in Pattinson
In Pattinson the primary judge ordered that a union and an official of the union each pay the maximum penalty for what the primary judge found was in effect a single contravention of s 349(1) of the FW Act.[3] The primary judge ordered the union pay the maximum penalty because of the union’s long standing history of contraventions of the FW Act to give effect to its “no ticket, no start” policy.[4] The primary judge also ordered the union official to pay the maximum penalty, even though the union official did not have a history of contraventions. The primary judge did so because it reflected poorly on the union official that his contravening conduct constituted the enforcement of the union’s “no ticket, no start” policy, and because it was important that the penalty be sufficient to deter repetition of the conduct, not only of the union official, but also of other delegates and officers of the union.[5] On appeal the Full Federal Court held the primary judge erred in ordering the union and union official to pay the maximum penalty because the maximum penalty should only be imposed for the most serious contravention of s 349(1) of the FW Act, and the contraventions for which the primary judge imposed the maximum penalty were not of the most serious kind.[6]
[3] The primary judge found there were two contraventions, but he reduced by 50% the maximum penalty payable for each contravention because the primary judge found the contraventions arose from the same course of conduct: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [28]
[4] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [6]
[5] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [29]
[6] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [7]
The plurality found the Full Federal Court erred in two ways. First, the Full Federal Court “was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention”.[7] Second, the Full Federal Court was misled by the view that “only the most serious examples of offending comprehended by s 349(1), and that is this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind”.[8] That was an error because “[n]othing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1)”.
[7] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10]
[8] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10]
Having identified the Full Federal Court’s errors, the plurality said that what “is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed””[9]; and that “[t]hat relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others”.[10] The plurality also said:[11]
The theory of s 546 of the Act is that the financial disincentive involved in the imposition of a pecuniary penalty will encourage compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice. Whether or not experience vindicates the theory of the Act is a matter for Parliament. The court's function is to give effect to the intention of the Act. In this regard, the court must do what it can to deter non‑compliance with the Act.
[9]Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10], quoting from Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at page 63, [156].
[10] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10], (my emphasis)
[11] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [66]
Change in principles governing the assessment of penalties?
The point of principle the plurality in Pattinson decided is a negative one: the notion of proportionality drawn from the criminal law has no place in the making of an order under s 546(1) of FW Act for the payment of a pecuniary penalty; the plurality did not intend to alter the principles for assessing penalties that had been applied before the Full Federal Court published its judgment in Pattinson. That is apparent from the following:[12]
The judicial task of setting an “appropriate” penalty under s 546 of the Act is informed by well-settled principles that have been applied without difficulty, and which require no supplementation by the Full Court’s “notion of proportionality”, drawn from the criminal law context of Veen [No 2].
[12] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [68]
The plurality identified two sets of “well-settled principles”. The first relates to the purpose for which a court may order a pecuniary penalty under s 546(1) of the FW Act. The plurality noted by reference to existing authority that civil remedy provisions of the kind enacted under s 546(1) of the FW Act have a “statutory function of securing compliance with provisions of the [statutory] regime”;[13] that “whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty . . . is primarily if not wholly protective in promoting the public interest in compliance”;[14] that the “principal, and . . . probably the only, object of penalties . . . is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act”;[15] and that “deterrence is the “principal and indeed the only object” of the imposition of a civil penalty: “[r]etribution, denunciation and rehabilitation have no part to play””.[16]
[13] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [14], quoting from the judgment of the plurality in The Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, at [24]
[14] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [15], quoting from The Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, at [55]
[15] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [15], quoting from Trade Practices Commission v CSR Ltd [1991] ATPR 41-076, at pages 52,152
[16] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [16], quoting from Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 97, at [19]
The second set of principles to which the plurality referred are those that relate to the method by which courts have assessed penalties. And here the plurality referred to two things. The first is the observation that the power conferred by s 546(1) of the FW Act to order a pecuniary penalty is discretionary. The plurality made this point in not accepting the submission that the rejection of the Full Federal Court’s notion of proportionality “must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender”.[17]
[17] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [46]
Although the plurality did not elucidate the notion of “discretion”, it may be taken it had in mind the notion of “discretion” as explained by the plurality in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission:[18]
“Discretion” is a notion that “signifies a number of different legal concepts”. In general terms, it refers to a decision-making process in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result.” Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment.
[18] Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194; [2000] HCA 47, at [19] (footnotes omitted)
That the plurality in Pattinson used “discretion” in the sense discussed in this passage is apparent from the second of the two things relating to the method by which courts have been assessing penalties to which the plurality referred; and that is the identification and weighing of particular factors when assessing a penalty. The plurality referred,[19] with apparent approval, to the following passage from the judgment of French J in Trade Practices Commission v CSR Ltd:[20]
[19] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [18]
[20] Trade Practices Commission v CSR Ltd [1991] ATPR 41-076, at pages 52,152‑52,153
The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:
1.The nature and extent of the contravening conduct.
2.The amount of loss or damage caused.
3.The circumstances in which the conduct took place.
4.The size of the contravening company.
5.The degree of power it has, as evidenced by its market share and ease of entry into the market.
6.The deliberateness of the contravention and the period over which it extended.
7.Whether the contravention arose out of the conduct of senior management or at a lower level.
8.Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.
9.Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.
Many judges have regarded factors to this effect as relevant or potentially relevant for determining the appropriate penalty that should be ordered under s 546(1) of the FW Act;[21] and the plurality characterised these as factors that “informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value”.[22] The plurality further noted:[23]
It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case.
[21] See, for example, Kelly v Fitzpatrick [2007] FCA 1080, at [14]; PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
[22] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [18]
[23] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [19] (footnotes omitted)
Although the plurality in Pattinson considered factors such as those French J identified in CSR as informing the assessment of the “appropriate deterrent value” of a penalty, the plurality did not explain in any detail how such factors are capable of being relevant to assessing the “appropriate deterrent value” of a penalty. It would be appropriate if I attempt to explain their relevance; and this requires me to address two sets of questions. The first is: what is deterrence and how does it work? The second is: what is sought to be deterred?
Deterrence
“To deter” means “[t]o discourage and turn aside or restrain by fear; to frighten from anything; to restrain or keep back from acting or proceeding by any consideration of danger or trouble”.[24] The expression “to deter”, therefore, points to some act or circumstance that discourages or restrains, or has a tendency to discourage or restrain, a person from doing something. In the context of s 546(1) of the FW Act:
(a)the act or circumstance that is assumed to discourage or restrain, or which is assumed has a tendency to do so, is the ordering of a pecuniary penalty under s 546(1) of the FW Act;
(b)the conduct the ordering of a pecuniary penalty is intended to discourage or restrain is conduct that constitutes a contravention of a civil remedy provision of the FW Act (contravening conduct); and
(c)the mechanism by which the ordering of a pecuniary penalty discourages or restrains, or has a tendency to discourage or restrain, a person from engaging in contravening conduct is that:
(i)the person is aware that if he or she engages in contravening conduct he or she may face a financial cost in the form of a penalty; and
(ii)desiring not to incur any such financial cost, the person will avoid the action that will expose the person to the financial cost, namely, contravening conduct.
[24] Oxford English Dictionary, online edition, accessed on 15 June 2022
This notion of deterrence presupposes that a person is aware that contravening conduct is liable to be subjected to an order for the payment of a pecuniary penalty, and the person will act rationally by avoiding conduct that will prove costly to the person. To repeat the words of the plurality in Pattinson, the “theory of s 546 of the Act is that the financial disincentive involved in the imposition of a pecuniary penalty will encourage compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice”.[25]
[25] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [66]
There are two other matters to note. I have explained the deterrence of a penalty in terms of its tendency to encourage or induce a person not to engage in contravening conduct. But the notion of deterrence is broader. Deterrence includes inducing persons to take positive steps to ensure they are and will remain in a position not to contravene provisions of the FW Act. Thus, to say that the purpose of s 546(1) is to deter non-compliance with the FW Act includes the purpose of inducing persons to take steps to ensure they are in a position in which they will not contravene provisions of the FW Act. This aspect of deterrence is particularly relevant to persons who have inadvertently engaged in contravening conduct, or who may in the future inadvertently engage in contravening conduct. The possibility of being penalised for an inadvertent contravention of a civil remedy provision acts as an incentive to take active steps to minimise the risk of contravening the FW Act.
The second matter to note relates to the distinction between “specific deterrence” and “general deterrence”. Specific deterrence is directed to assessing a penalty for the purpose of inducing the contravenor from again engaging in contravening conduct; and it attempts to achieve this both by signalling that any future contravening conduct will be met by the infliction of a penalty, and by causing the contravenor to experience the penalty itself and thus demonstrate to the contravenor the consequences of his or her contravening conduct. General deterrence, on the other hand, “aims to deter the general population from committing similar offences by instilling the fear of incurring similar sanctions”.[26] In the way I will attempt to show later in these reasons, however, the factors that are relevant to assessing the appropriate specific “deterrence value” are relevant to assessing the appropriate general “deterrence value” and, therefore, to assessing the “deterrent value” of a penalty as a whole.
[26] National Judicial College of Australia, General Sentencing Principles accessed on 21 June 2022
Deter what?
It might be thought that this question has already been answered: a penalty is ordered under s 546(1) of the FW Act to deter contravening conduct. Although true, this answer is not useful; and by itself does not explain why factors such as those French J identified in CSR are relevant or potentially relevant to assessing penalties, and why courts have consistently considered those and similar factors as relevant, or potentially relevant, to assessing penalties. That is so because contraventions of any one civil remedy provision can occur in many different ways and in many different circumstances; and the different ways and circumstances in which contraventions occur call for the assessment of different deterrence values. And this is the intended relevance of factors of the sort French J identified in CRS, and which courts have considered relevant when assessing penalties: the factors are intended to reveal the kind of contravention in relation to which the court is to assess a penalty, and the circumstances in which that contravention occurred; and, therefore, to identify the kind of contravening conduct the assessment of a pecuniary penalty should seek to deter.
The plurality in Pattinson recognised that this is the case. The plurality observed that the purpose of s 546 of the FW Act is “the deterrence of future contraventions of a like kind by the contravenor and by others”;[27] and that an “appropriate” penalty “is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”.[28] The plurality illustrated how the particular circumstances of a contravention might be taken into account when assessing a penalty. The plurality noted that a modest penalty may be appropriate for a “one-off”, inadvertent contravention; and this is to be contrasted with a contravention that is “the latest instance of the contravenor’s pursuit of a strategy of deliberate recalcitrance in order to have its way”.[29]
[27] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10], (my emphasis)
[28] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [46], (my emphasis)
[29] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [46]
These observations suggest that when assessing the appropriate pecuniary penalty for a contravention of a civil remedy provision, the Court should:
(a)apply factors of the sort French J specified in CSR to identify the particular kind of contravention for which a penalty is sought to be imposed, and the circumstances in which the contravention occurred; and
(b)assess the appropriate deterrence value of the penalty by reference to the need to deter:
(i)the contravenor, given the kind of contravening conduct in which the contravenor engaged, and the circumstances in which the contravenor engaged in the contravening conduct, and
(ii)persons who may find themselves in substantially the same circumstances as those in which the contravenor engaged in the contravening conduct.
It may now be seen how the particular kind of contravention, and the particular circumstances in which the contravention occurred, may be taken into account when determining the appropriate deterrence value of a penalty, both specific and general; and how the matters that are relevant for assessing the specific deterrence value of a penalty are often relevant to assessing the general deterrence value of a penalty. Factors that tend to point to the need for only a modest penalty to achieve specific deterrence - for example, an inadvertent, one-off contravention - will also tend to point to the need for a modest penalty to achieve general deterrence; and that would be because the class of persons who would be the object of general deterrence would be persons who are liable to engage in the same kind of one-off, inadvertent contravention. A modest penalty would afford sufficient deterrence to these persons by inducing them to take steps to ensure they do not, through inadvertence, fail to comply with the provisions of the FW Act.
That is to be contrasted with what has been found to be a flagrant contravention of a civil remedy provision. The factor that will tend to point to the need for a high penalty to achieve specific deterrence, namely, the flagrancy of the contravenor’s conduct, will also point to the need for a high penalty to achieve general deterrence; and that would be because the class of persons who would be the object of general deterrence would be persons who might be minded to engage in flagrant contraventions of the FW Act. The high penalty should signal to such persons that if they do engage in flagrant contraventions of the FW Act, they will be met with a high penalty.
No role for retribution?
It may be asked whether the plurality in Pattinson in truth held that the notion of retribution has no role in the assessment of the deterrence value of a penalty, and that the only purpose for which a pecuniary penalty may be ordered is deterrence. It would be surprising if the plurality did in fact so hold, or if the plurality is to be taken to have so held.
First, in its ordinary meaning, a “penalty” is a form of punishment.[30] That is what Heerey J in Mathers & Anor v Commonwealth of Australia said about “penalty” in s 76 of the Trade Practices Act 1974 (Cth): “a s 76 penalty is in truth a punishment, designed to deter conduct which Parliament has determined is contrary to public welfare”.[31] Punishment, therefore, is inherent in the notion of penalty: that which s 546(1) of the FW Act empowers a court to do is to inflict a pecuniary punishment on a person who has engaged in contravening conduct because the person has engaged in such conduct; and the court is required to assess the appropriate pecuniary penalty - that is, the appropriate punishment - that ought to be inflicted on the person who has engaged in the contravening conduct for which a pecuniary penalty is to be assessed.
[30] The Oxford English Dictionary (online edition, accessed 19 June 2022) includes as definitions of “penalty” “[p]unishment, disadvantage, or liability” and “a punishment imposed for breach of a law, rule, or contract”; and it defines “punishment” as the “infliction of a penalty or sanction in retribution for an offence or transgression”.
[31] Mathers & Anor v Commonwealth of Australia [2004] FCA 217, at [29]
Second, it is by virtue of its being a punishment that the ordering of a pecuniary penalty serves to deter contravening conduct: it is the prospect of punishment that deters. The purpose of assessing a pecuniary penalty to punish the contravenor, therefore, is not only consistent with the purpose of deterrence, but also an essential element of deterrence. A modest penalty, for example, would be an appropriate punishment for an inadvertent, one-off contravention of a civil remedy provision; but that may also be an appropriate penalty to encourage conduct that is aimed at avoiding future one-off, inadvertent contraventions. On the other hand, a high penalty would be an appropriate punishment for a wilful contravention; and that too may also be an appropriate penalty to deter future wilful contraventions.
Third, if the sole purpose of inflicting a pecuniary penalty is to deter future contravening conduct, the stated mechanism of deterrence would not be the fear of punishment; that is, of being ordered to pay an amount as punishment for the contravening conduct. The stated mechanism would be the fear of being ordered to pay an amount calculated to deter future contraventions. To so conceive the purpose of s 546(1) of the FW Act, however, would render the “pecuniary penalty” it empowers a court to order something different from “a punishment, designed to deter conduct which Parliament has determined is contrary to public welfare”.[32]
[32] Mathers & Anor v Commonwealth of Australia [2004] FCA 217, at [29]
Fourth, to accept that assessing a pecuniary penalty requires the assessment of an appropriate punishment for the contravening conduct in question does not imply that punishment is the only means for deterring future contravening conduct; there may be factors relevant to general deterrence that lie outside the particular circumstances of the contravening conduct in question that requires that the value of the penalty reflect more than the value of the punishment that it would otherwise be appropriate to inflict on the contravenor.
Even if, however, the plurality in Pattinson did hold that retribution has no role in the assessment of the deterrence value of a penalty, and that the only purpose for which a penalty may be ordered is deterrence, that ought not result in a different assessment of the appropriate pecuniary penalty. That would be because the plurality held that the purpose of s 546 of the FW Act is “the deterrence of future contraventions of a like kind by the contravenor and by others”.[33] That requires a court to identify the particular circumstances in which the contravention for which a penalty is being assessed occurred, the very thing a court would be required to identify to determine the punishment that should be inflicted on the contravenor for having engaged in the contravening conduct. But the court would not be asking what would be the appropriate punishment for such contravention; the question it would be required to ask is what would be the appropriate penalty to deter the contravenor and others from engaging in contravening conduct of the same kind.
assessment of penalty - PW
[33] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [10], (my emphasis)
Nature and extent of the contravention, and the circumstances in which it occurred
The following matters are relevant:
(a)PW engaged in a single contravention of s 44(1) of the FW Act that was constituted by PW terminating the employment of Mr Symons without paying to him the redundancy pay of $62,988.46 to which he became entitled under s 119(1)(a) of the FW Act.
(b)My concluding that PW terminated Mr Symons’ employment for the reason that his job was redundant was based on facts which I found were within the knowledge of PW, but which PW itself did not characterise as I found the law characterises them.
(c)Although I did not accept the evidence that was offered to prove the legal advice PW received in connection with PW’s decision to terminate Mr Symons’ employment, the evidence suggests that PW did seek and receive legal advice. Given I did not accept the evidence of the legal advice PW said it received, there is no evidence before me of the actual advice PW sought and was given in relation to its decision to terminate Mr Symons’ employment. On the other hand, however, it has not been suggested that PW did not seek legal advice, or that PW did not believe Mr Symons’ job was not made redundant or that PW received but disregarded advice that suggested or may have suggested that PW had decided to make Mr Symons’ job redundant.
In these circumstances, PW’s contravention of s 44(1) is to be assessed as one in which PW knew all of its essential factual elements of the contravention, took some steps to obtain and receive legal advice; but it did not know that those elements gave rise to an obligation under s 119(1)(a) of the FW Act to pay redundancy pay to Mr Symons, and that it contravened s 44(1) of the FW Act by not paying to Mr Symons the redundancy pay.
Loss and damage
PW’s contravention resulted in Mr Symons suffering loss in the amount of $62,988.46, being the amount of the redundancy pay PW was obliged to pay to Mr Symons when it terminated his employment. It is not submitted, however, and there is in any event no suggestion in the evidence, that PW profited from having contravened s 44(1) of the FW Act.
Deterrence
As I have already noted, PW engaged in one contravention of the FW Act; and it did so not knowing that the elements of the contravention gave rise to an obligation under s 119(1)(a) of the FW Act to pay redundancy money to Mr Symons. In addition, PW contested Mr Symons’ claims that his job was made redundant; and it cannot be said that PW did not have reasonable grounds for contesting Mr Symons’ claim that PW made his job redundant. Lastly, there is no evidence PW has contravened any other provision of the FW Act. In these circumstances I am satisfied there is no need to impose any penalty to specifically deter PW from engaging in any future contravening conduct.
As for general deterrence, Mr Symons by his counsel submits that the retrenchment of employees without payment of redundancy appears to be “relatively common”; such breaches have been held to be serious; the effect of employees can be substantial; and the need for general deterrence, therefore, is considerable.[34] These submissions, however, must be viewed in light of the particular circumstances of this case.
[34] Outline of submissions in reply as to penalty and costs by the applicant, [11]
I have found that PW took some steps, including seeking and obtaining legal advice, about whether terminating Mr Symons would trigger an obligation to make a redundancy payment; and it has not been suggested that PW did not believe Mr Symons’ job was not made redundant, or that PW received but disregarded advice that suggested or may have suggested that PW had decided to make Mr Symons’ job redundant. In those circumstances the amount for general deterrence should be assessed by reference to persons who may find themselves in similar circumstances as those in which PW found itself when it decided to terminate Mr Symons’ employment. A penalty should be set to signal to such persons that the tasks PW undertook to satisfy itself that its decision to terminate Mr Symons’ employment did not give rise to an obligation to pay redundancy pay fell well short of what it ought reasonably to have done to properly satisfy itself that its decision to terminate Mr Symons’ employment did not give rise to an obligation to make a redundancy payment under s 119(1)(a) of the FW Act. Stated another way, a penalty should be set to signal to such persons that they ought to do all that is reasonable to satisfy themselves whether a decision to terminate a long term employee gives or does not give rise to a liability under s 119(1)(a) of the FW Act to make a redundancy payment.
Penalty
I consider that $12,000 is an appropriate penalty for PW to pay for its contravention of s 44(1) of the FW Act.
assessment of penalty - Mr vercoe
Mr Vercoe was the controlling mind of PW in relation to PW’s contravention of s 44(1) of the FW Act. The matters I have identified in relation to the assessment of penalty for PW’s contravention, therefore, apply with equal force to Mr Vercoe, save for two matters; and that is Mr Vercoe no longer has any connection with PW, and he is currently employed on a modest income. That, however, does not lead me to assess penalty differently because I have found there is no need to impose any penalty to specifically deter PW from engaging in any future contravening conduct.
What I have said about general deterrence in relation to PW applies to Mr Vercoe: there is some merit in imposing a penalty to signal to persons who may find themselves in similar circumstances as those in which Mr Vercoe contravened s 44(1) of the FW Act that they ought to do all that is reasonable to satisfy themselves whether a decision to terminate a long term employee gives or does not give rise to a liability under s 119(1) of the FW Act to pay a redundancy payment.
I consider that $2,400 is an appropriate penalty for Mr Vercoe to pay for his contravention of s 44(1) of the FW Act.
costs
Mr Symons applies for costs. In his counsel’s written submissions dated 29 March 2021 Mr Symons relied on two grounds: the respondents unreasonably persisted in their opposition to Mr Symons’ claims; and they failed to engage in a reasonable process to settle the proceeding.
The first of the grounds may be put aside. Counsel for Mr Symons did not advance any arguments or submissions in support of it; and in any event my earlier reasons make it impossible to sustain a submission that the respondents’ opposition to Mr Symons’ claim was unreasonable.
In support of his second ground Mr Symons relies on correspondence that passed between the lawyers for each of Mr Symons and the respondents. The first is a letter dated 27 May 2020 from Mr Symons’ lawyer to Mr Vercoe.[35] It states that PW had contravened s 119 of the FW Act, and demanded payment to Mr Symons of the redundancy pay due to Mr Symons together with interest. The second is a “without prejudice” letter dated 21 October 2020 from Mr Symons’ lawyer to the respondents’ lawyer.[36] The letter sets out in some detail Mr Symons’ claim and reasons why PW’s termination of Mr Symons’ employment “came about in circumstances of redundancy within the meaning of section 119”. The letter stated that Mr Symons “notionally” quantified his claim at $157,309.09, but said Mr Symons would settle his claim if the respondents agreed, among other things, to pay Mr Symons $85,000, less any tax payable on that amount; pay $25,000 for the costs Mr Symons had incurred; and pay Mr Symons $110,000 in exchange for the transfer of shares Mr Symons held in PW.
[35] Affidavit of D E Collinge 31.03.2022, annexure “A”
[36] Affidavit of D E Collinge 31.03.2022, annexure “B”
In his counsel’s written submission dated 29 March 2021 Mr Symons submitted the respondents did not respond to these letters. Counsel for Mr Symons accepts that the respondents did respond by their lawyers’ letter dated 27 May 2021.[37] That letter addressed the matters contained in Mr Symons’ lawyer’s letter dated 21 October 2020, at the end of which Mr Symons was invited “to make a more commercial offer of settlement for our clients to consider”. The respondents, by their lawyer’s letter dated 30 July 2021, offered $10,000 to settle Mr Symons’ claim; but this was not accepted.[38]
[37] Affidavit of P A Fink 08.05.2022, annexure “PF-2”
[38] Affidavit of P A Fink 08.05.2022, annexure “PF-3”
This correspondence does not disclose any unreasonable behaviour by the respondents or their lawyers. The offer made in Mr Symons’ lawyer’s letter dated 21 October 2020 could not reasonably be characterised as an offer to compromise Mr Symons’ claims because it related to the purported settlement of claims or matters that did not form part of the matters in dispute in this proceeding. For that reason alone the respondents did not act unreasonably in not responding to the offer until 27 May 2021. Further, even if it could be said that the respondents acted unreasonably, there is no basis for submitting that if they had acted reasonably, there would have been any prospect of the parties resolving their dispute. Finally, Mr Symons cannot submit that had the respondents accepted the offer made in his lawyer’s letter dated 21 October 2020, they would have been in a better position than they now are in because of Mr Symons’s having succeeded on his claims for relief in this proceeding.
disposition
I propose to order that PW and Mr Vercoe pay pecuniary penalties of $12,000 and $2,400 respectively; that, pursuant to s 546(3)(c) of the FW Act, they pay the pecuniary penalties to Mr Symons; and that they do so within 28 days after the day I pronounce my orders. I will also dismiss Mr Symons’ application for costs.
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 24 June 2022
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