Thompson v Freshfood Management Services Pty Ltd (No 2)
[2023] FedCFamC2G 1065
•23 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Thompson v Freshfood Management Services Pty Ltd (No 2) [2023] FedCFamC2G 1065
File number(s): SYG 2620 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 23 November 2023 Catchwords: INDUSTRIAL LAW – assessment of pecuniary penalties for contraventions of s 50 of the Fair Work Act 2009 (Cth) – pecuniary penalties ordered. Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 50, 539(1), 539(2), 546(1), 546(2), 546(3)(c), 557
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480
Contin v The Queen [2012] VSCA 247
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Fair Work Ombudsman v Lohr [2018] FCA 5
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
R v Holder (1983) 3 NSWLR 245
Royer v Western Australia [2009] WASCA 139
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4
The Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Thompson v Freshfood Management Services Pty Ltd [2023] FedCFamC2G 743
Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161
Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829
Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193
Division: Fair Work Number of paragraphs: 60 Date of hearing: 14 November 2023 Place: Sydney Counsel for the Applicant: Ms L Reid Solicitor for the Applicant: Turner Freeman Lawyers Counsel for the Respondent: Mr R Moore Solicitor for the Respondent: Hospitality Legal Pty Ltd ORDERS
SYG 2620 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FLAVIA THOMPSON
Applicant
AND: FRESHFOOD MANAGEMENT SERVICES PTY LTD
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
23 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the respondent pay:
(a)a pecuniary penalty of $26,325 for the respondent’s contravention of s 50 of the FW Act identified in paragraph 3 of the declarations and orders made on 8 September 2023 (Declarations);
(b)a pecuniary penalty of $8,775 for the respondent’s contravention of s 50 of the FW Act identified in paragraph 4 of the Declarations; and
(c)a pecuniary penalty of $26,000 for the respondent’s contravention of s 50 of the FW Act identified in paragraph 5 of the Declarations.
2.Pursuant to s 546(3)(c) of the FW Act the respondent pay the pecuniary penalties referred to in order 1 to the applicant within 28 days after the date of these orders.
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
In the reasons for judgment I published on 18 August 2023 (earlier reasons),[1] I concluded that what I identified as the “Enterprise Agreements” covered Ms Thompson’s employment with the respondent (FMS), and that she fell within the classification of a Level 5 employee. I also concluded that cl 22.8.1 of what I identified as the 2019EA applied to FMS’s termination of Ms Thompson’s employment because her position had become redundant. I made no order other than to list the matter for directions to make orders to give effect to the earlier reasons, and also to make directions in relation to hearing submissions on penalty.
[1] Thompson v Freshfood Management Services Pty Ltd [2023] FedCFamC2G 743
The parties agreed on the declarations and orders I should make to give effect to the earlier reasons. Pursuant to that agreement, on 8 September 2023 I made the following declarations (Declarations):
1. The Applicant, Ms Flavia Thompson was:
(a) for the period from 4 November 2014 to 15 July 2015 covered by and entitled to have applied the terms and conditions of the Freshfood Management Services Pty Ltd as a Wholly Owned Subsidiary of Freshfood Australia Holdings Pty Ltd & National Union of Workers, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, information, Postal, Plumbing and Allied Services Union of Australia (New South Wales) ("ETU" Enterprise Agreement 2010 (2010EA); and,
(b)for the period from 15 July 2015 to 12 January 2017 covered by and entitled to have applied the terms and conditions of the Freshfood Management Services Pty Ltd as a Wholly Owned Subsidiary of Freshfood Australia Holdings Pty Ltd & the National Union of Workers, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Enterprise Agreement 2014 (2014EA); and,
(c)for the period from 13 January 2017 to 1 April 2020 covered by and entitled to have applied the terms and conditions of the Fresh Food Management Services Pty Ltd as a Wholly Owned Subsidiary of Freshfood Australia Holdings Pty Ltd & The National Union of Workers, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Enterprise Agreement 2016 (2016EA); and,
(d)for the period from 1 April 2020 to 8 May 2019 covered by and entitled to have applied the terms and conditions of the Freshfood Management Services Pty Ltd as a Wholly Owned Subsidiary of Freshfood Australia Holdings Pty Ltd & the United Workers Union, The Australian Manufacturing Workers Union &the Communications, Electrical, Electronic Energy, Information, Postal, Plumbing and Allied Services Union of Australia Enterprise Agreement 2019 (2019E A);
and, collectively referred to as the Enterprise Agreements.
2. The Applicant, Ms Flavia Thompson was entitled, at all material times during her employment in the position of Process Control & Finished Product Testing Officer commencing 23 August 2012, and including the termination of the employment on 8 May 2020, to be paid the wage rates applicable to a Team Facilitator (Grade 5) under the terms and conditions of the Enterprise Agreements.
3.The Respondent contravened s 50 of the Fair Work Act 2009 (CTH) (FW Act) by failing to pay to Ms Flavia Thompson in the period from 4 November 2014 to 8 May 2020 the wage rate provided for a Team Facilitator (Grade 5) for her ordinary hours of work and inclusive of annual leave entitlements, including upon the termination of the employment:
(a) for the period from 4 November 2014 to 12 January 2017 as prescribed by cl 27 of the 2014EA; and,
(b)for the period from 13 January 2017 to 1 April 2020 as prescribed by cl 27 of the 2016EA; and,
(c) for the period from 2 April 2020 to 8 May 2020 as prescribed by cl 27 of the 2019EA:
(Hourly Rate Contravention).
4.The Respondent contravened s 50 of the Fair Work Act 2009 (CTH) (FW Act) by failing to pay to Ms Flavia Thompson in the period from 4 November 2014 to 8 May 2020 annual leave loading upon annual leave when taken, and including at termination contrary to clause 41.6 of the 2014EA and 2016EA, and clauses 41.6 and 41.8 of the 2019EA, respectively, (Annual Leave Loading Contravention).
5.The Respondent contravened s 50 of the Fair Work Act 2009 (CTH) (FW Act) by failing to pay to Ms Flavia Thompson at the time she ceased her employment with the respondent on 8 May 2020 redundancy pay under clause 22.8.1 of the 2019EA (Redundancy Pay Contravention).
In addition to making declarations, I ordered that FMS pay compensation to Ms Thompson for the losses she suffered as a consequence of the contraventions the Declarations identified.
On 18 September 2023 I made orders by consent in chambers in relation to the hearing of submissions on penalty. The parties filed written submissions, but no additional affidavits; and, on 14 November 2023, I heard oral submissions on the question of penalties.
In these reasons for judgment, which assume familiarity with the earlier reasons, I consider what, if any, pecuniary penalties I should order FMS pay for its contraventions of s 50 of the Fair Work Act 2009 (Cth) (FW Act).
POWER AND PRINCIPLES
Power
Under s 546(1) of the FW Act 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. Column 1 includes s 50 of the FW Act.
Subsection s 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 specified in the table in s 539(2) of the FW Act for the contravention of s 50 of the FW Act during the period of FMS’s contraventions are 60 penalty units.
Under s 12 of the FW Act, “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit during the period over which FMS engaged in the contravention identified in paragraph 3 of the Declarations (Hourly Rate Contravention) (that is, from 4 November 2014 to 8 May 2020) varied as follows:[2]
[2] Adapted from “CDPP . . . National Legal Directions Commonwealth Penalty Units: Value”, December 2022.
Period Penalty Unit Value Amendments made by 1 July 2017- 30 June 2020 (inclusive)
$210
Schedule 1 Item 1 of the Crimes Amendment (Penalty Unit) Act 2017 (Cth)
31 July 2015 – 30 June 2017 (inclusive)
$180
Schedule 1 Item 5 of the Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth)
28 December 2012 - 30 July 2015 (inclusive)
$170
Schedule 3 Item 7 of the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth)
In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2),[3] Katzmann J held that, where contraventions consist of a course of conduct for the purpose of s 557(1) of the FW Act that occurs before and after the day on which the value of a penalty unit has increased, the Court should apply the higher penalty unit value for the purpose of determining the maximum penalty that may be imposed for a particular transaction; but, when assessing the penalty, the Court may take into account the contravening conduct’s having occurred during the period in which there was a lower penalty unit value.
[3] Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557, at [398]
The maximum penalty for each of FMS’s contraventions of s 50 of the FW Act, therefore, is $63,000, which is calculated on the basis of a $210 penalty unit value.
Principles
Object of making orders under s 546(1) of the FW Act
In Australian Building and Construction Commissioner v Pattinson the plurality observed that civil penalty provisions of the kind enacted in s 546(1) of the FW Act have a “statutory function of securing compliance with provisions of the [statutory] regime”;[4] 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”;[5] that the “principal, and . . . probably the only, object of the 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”;[6] and that “deterrence is the “principal and indeed only object” of the imposition of a civil penalty: ““[r]etribution, denunciation and rehabilitation have no part to play””.[7] In short, the task of assessing an appropriate penalty under s 546(1) of the FW Act is to assess a “penalty of appropriate deterrent value”.[8]
[4] 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].
[5] 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].
[6] 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.
[7] 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].
[8] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [18]
The objective of deterrence, however, must be considered having regard to “the need for deterrence in respect of the particular case”.[9] The purpose of s 546(1) of the FW Act is “the deterrence of future contraventions of a like kind by the contravenor and by others”;[10] and an “appropriate” penalty “is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”.[11]
[9] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [46]
[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 [46] (my emphasis)
Assessing penalty for single contravention – factors
The plurality in Pattinson recognised that, when assessing an appropriate penalty under s 546(1) of the FW Act, the Court may have regard to a number of factors that are relevant to assessing what is necessary for deterrence in respect of the particular contravention in question. That is apparent from the plurality referring,[12] with approval, to the following passage from the judgment of French J in Trade Practices Commission v CSR Ltd:[13]
[12] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [18]
[13] 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.
The plurality in Pattinson characterised these as factors that “informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value”,[14] further noting the following:[15]
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.
[14] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [18]
[15] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, at [19] (footnotes omitted)
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act has been to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[16] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd.[17] Those considerations are:
[16] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[17] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[18]
[18] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[19]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[19] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Approach to assessing penalties for multiple contraventions
What I have said so far concerns the assessment of an appropriate penalty for a single contravention. In many cases, however, the Court is required to assess multiple contraventions of civil remedy provisions of the FW Act. The approach to assessing pecuniary penalties in those circumstances was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown as follows:[20]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO . . . and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary . . .
[20] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
The first step requires the Court to identify the contraventions in relation to which the appropriate penalties are to be assessed.
The second step requires the Court to consider whether any two or more of the contraventions in question are to be treated as a single contravention under s 557(1) of the FW Act, which provides:
For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a)the contraventions are committed by the same person; and
(b)the contraventions arose out of a course of conduct by the person.
I considered some of the principles relating to s 557(1) of the FW Act in Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor.[21] After reviewing a number of cases, I said:[22]
Two firm principles may be drawn from the cases to which I have referred, one negative, and one positive. The negative principle is that s 557(1) of the FW Act does not apply to contraventions of different terms of modern awards, even if such contraventions arise out of a course of conduct, and even if the contraventions affect only one person. The positive principle is that s 557(1) of the FW Act applies to the multiple contravention of the one term of a modern award, even where the contravention may affect two or more persons. These principles may be extrapolated to contraventions of civil penalty provisions that do not involve the contravention of a term of a modern award. Just as s 557(1) of the FW Act does not apply to the contravention of two or more separate terms of an award, so too does it not apply to contraventions of two or more separate civil remedy provisions that do not involve a breach of a term of an award. On the other hand, s 557(1) of the FW Act applies to multiple contraventions of a single civil penalty provision, even though the contraventions may affect two or more persons.
These principles, important as they are, are limited. The judgments to which I have referred do not explicitly consider the meaning of “course of conduct”. From the words themselves, it may be said that “course of conduct” denotes a series of acts that are connected in some way; and given that it is conduct – namely, acts or omissions of a person – that is required to be connected in some way, the required connection must be sought, at least in substantial part, in the state of mind that the person engaging in the conduct has in relation to the conduct. That a contravener’s state of mind is relevant to determining whether conduct he or she has engaged in is a “course of conduct” is supported by the judgment of Nettle J in Berlyn v Brouskos. In that case, his Honour considered the meaning of “course of conduct” as that expression appears in the definition of “stalking” given in s 21A(2) of the Crimes Act 1958 (Vic). His Honour concluded that “course of conduct” for the purposes of that subsection is a course of conduct as prescribed in the California Penal Code, namely, “a pattern of conduct composed of a series of acts over a period of time however short, evidencing a continuity of purpose”.
Although the question whether conduct amounts to a “course of conduct” is to be determined, at least substantially, by reference to the person’s state of mind, proof of that state of mind may, and usually will be inferred from objective matters existing outside that person’s mind. Of importance would usually be whether the relevant conduct consists of an omission, the number of acts or omissions that are claimed to constitute the course of conduct, the time that separates each act or omission from the other, and whether the acts or omissions are similar or dissimilar, and, if dissimilar, whether they are jointly necessary to the achievement of the conduct that constitutes the contravention.
[21] Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626
[22] Fair Work Ombudsman v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626, at [32]-[34]
It is apparent from the third and fourth Declarations that the parties have proceeded on the basis that s 557(1) of the FW Act has been applied to FMS’s multiple contraventions of the Enterprise Agreements constituted by FMS’s failure to pay to Ms Thompson wages at the rates it was required to pay Ms Thompson under the Enterprise Agreements, and by failing to pay annual leave loading.
The third step contained in the passage from the judgment of Bromwich J in New Shanghai requires the Court to consider whether there is any overlap “between groups of separate aggregated contraventions” to ensure the same conduct is not penalised twice and, if there is an overlap, whether there should be “further adjustment”. Bromwich J did not expressly describe the nature of the adjustment that may need to be made to avoid a double penalty; but the passage suggests that the adjustment is to be made by further aggregation. That is apparent from the fourth step the passage identifies, namely, the consideration of “the appropriate penalty in respect of each final individual group of contraventions, taken in isolation” (emphasis added).
Given s 557(1) of the FW Act, however, there would appear to be no further room to treat two or more contraventions as one contravention by applying what is often referred to as the “one transaction principle” or the “course of conduct principle”. That is what Bromwich J concluded in Fair Work Ombudsman v Lohr, where his Honour accepted the FWO’s submission that s 557 of the FW Act “is the express statutory manifestation of the one transaction or course of conduct principle”; that by “enacting s 557 Parliament has determined how multiple contraventions arising from a course of conduct are to be treated”; and that, once s 557 has been applied it is not open to “further consolidate the … contraventions into one contravention by applying that principle, in effect, again”.[23] That is also what the Full Federal Court held in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[24]
The important point to emphasise is that the course of conduct principle, in the criminal context at least, does not operate to permit a sentencing judge to impose a single sentence in respect of multiple offences on the basis that the offences formed part of a course of conduct. Absent a statutory provision that provides otherwise, a sentencing judge is to impose a separate sentence, albeit with the option of concurrency, for each offence.
. . . .
The important point to emphasise is that, contrary to the Commissioner’s submissions, neither the course of conduct principle nor the totality principle, properly considered and applied, permit, let alone require, the Court to impose a single penalty in respect of multiple contraventions of a pecuniary penalty provision. . . . That is not to say that the Court can impose a single penalty in respect of each course of conduct. Likewise, there is no doubt that in an appropriate case involving multiple contraventions, the Court should, after fixing separate penalties for the contraventions, consider whether the aggregate penalty is excessive. If the aggregate is found to be excessive, the penalties should be adjusted so as to avoid that outcome. That is not to say that the Court can fix a single penalty for the multiple contraventions.
[23] Fair Work Ombudsman v Lohr [2018] FCA 5, at [33]
[24] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [114], [148] (Dowsett, Greenwood, and Wigney JJ)
Thus, the third step when assessing multiple contraventions of provisions of the FW Act is to provisionally assess the appropriate penalty for each contravention, including each set of contraventions which, because of s 557(1) of the FW Act, are to be treated as single contraventions.
The fourth step is to consider whether any adjustment should be made to the penalties that have been (provisionally) considered to be appropriate for the contraventions in question. That involves applying what is often referred to as the “one transaction principle”, which has been described as follows:[25]
At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
[25] Royer v Western Australia [2009] WASCA 139, at [22]
Lockhart J stated the principle in the context of the imposition of penalties for contraventions of provisions of the Trade Practices Act 1974 (Cth) in Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd:[26]
Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode . . .
[26] Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161, at 42, 277
The Full Federal Court has confirmed the relevance of the “one transaction principle” in the assessment of multiple contraventions of a single civil remedy provision in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[27]
There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions.
[27] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [148] (Dowsett, Greenwood, and Wigney JJ)
There are two matters to note about the application of the “one transaction principle”. First, the principle does not relieve the Court from assessing a penalty for each contravention, even if the contravention arose out of a course of conduct.[28] Second, “even if the contraventions are properly characterised as arising from a single course of conduct, a judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions”.[29]
[28] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [114], [148] (Dowsett, Greenwood, and Wigney JJ)
[29] Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73, at [235] (Allsop CJ, Middleton and Robertson JJ)
The fifth step consists of the application of the “totality principle”. Under that principle, a sentencing judge is required “to impose a sentence or sentences which reflect the overall criminality of the offending for which the offender has been convicted”.[30] In R v Holder Street CJ described the principle as follows:[31]
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
[30] Contin v The Queen [2012] VSCA 247, at [38]
[31] R v Holder (1983) 3 NSWLR 245, at page 260
The totality principle has been held to apply to the assessment of pecuniary penalties.[32]
HOURLY RATE CONTRAVENTION (BEFORE ADJUSTMENT)
[32] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, at [41]
Nature, extent, circumstances, and deliberateness of contravening conduct
The contravening conduct consisted of FMS’s failure, from 4 November 2014 to 8 May 2020, to pay to Ms Thompson wages at the rates provided for by the Enterprise Agreements. The conduct was systematic and prolonged.
In its written submissions,[33] FMS submits that the circumstances in which FMS failed to pay Ms Thompson her correct entitlements are analogous to the circumstances stated by Tracey J in Transport Workers’ Union of Australia v Linfox Australia Pty Ltd,[34] namely, that there was a genuine disagreement between an employee, Ms Thompson, and the employer, FMS, about whether the Enterprise Agreements covered Ms Thompson’s employment.
[33] Outline of Respondent’s Submissions on Penalty [4], [5]
[34] Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829, at [1]-[3]
In oral submissions, counsel for FMS submitted that the dispute about the coverage of the Enterprise Agreements had come to light only after Ms Thompson’s employment had been terminated; and FMS, therefore, did not have an opportunity to resolve any dispute about the coverage of the Enterprise Agreements while Ms Thompson was employed by FMS. This is not a case where FMS was alert to the possibility that Ms Thompson was covered by the Enterprise Agreements, and yet continued to engage Ms Thompson on the basis that the Enterprise Agreements did not cover her employment. Counsel further submitted that FMS held a bona fide view that Ms Thompson was not covered by the Enterprise Agreements; and whether FMS should be ordered to pay any penalty and, if so, the amount of the penalty, should be determined on the basis that FMS had adopted an arguable construction of the Enterprise Agreements which this Court has concluded is incorrect.
Ms Thompson, on the other hand, in her counsel’s written submissions, submits that FMS’s conduct was deliberate and wilful in two ways. First, FMS “took the odds” on its ultimately erroneous construction of the Enterprise Agreements. Ms Thompson submitted that the circumstances in which FMS had engaged Ms Thompson on the basis that she was not covered by the 2010EA and subsequent Enterprise Agreements are similar to those considered by Rangiah J in Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2),[35] and by the Full Federal Court in Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission.[36] In Hail Creek, Rangiah J said:[37]
I consider that a penalty should be imposed upon the respondent in the circumstances of the case. Firstly, in circumstances where the applicant had contested the respondent’s proposed conduct and where the proper construction of the Enterprise Agreement was far from certain, the respondent can be characterised as having “taken the odds”. . . . What is significant is that the respondent knew that it was taking a risk that it would be contravening the Enterprise Agreement, but did not take an obvious step to avoid that risk. That step was to apply, in the face of the dispute, for an appropriate declaration.
[35] Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480
[36] Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193
[37] Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480, at [17]
In Universal Music Australia the Full Federal Court said:[38]
As we have said, the contravening conduct was plainly and deliberately anti-competitive in its intent. It was conduct which, at least, ran a serious risk of being in breach of the Act. If this was appreciated, then the fact that the risk came home against expectations does not entitle the perpetrator to a discount. If the existence of the risk was not appreciated, then the company concerned misunderstood the law applicable to an important area of commerce and would not be entitled to any discount.
The fact that legal advice was obtained by one of the parties is also of little consequence. It illustrates that risk was appreciated. However, legal advice is obtained for the benefit of the company and only for the benefit of the company. It is not a discounting factor. If legal advice is wrong, that is a matter between the company and the legal adviser.
In our opinion, to give a substantial discount for these factors sends the wrong signal to the commercial community. It will encourage risk-taking and pushing the boundaries of anti-competitive conduct. If, nonetheless, a proceeding is instituted, it will encourage the most vigorous possible defence, in an endeavour to demonstrate the supposed complexity and uncertainty of the law. Many cases of contravening conduct can be described as complex and uncertain as to result. As submitted for ACCC, the Court has recognised in many cases that the difficulty of detecting and proving contraventions of Pt IV of the Act requires adequate penalties to be imposed when contravening conduct is detected and established . . . . If a company ‘takes the odds’, it must expect serious consequences if it miscalculates.
[38] Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193, at [308]-[310]
The parties’ competing submissions are to be assessed by reference to the findings I made in the earlier reasons about the circumstances in which FMS engaged Ms Thompson to what in the earlier reasons I described as the PCFPT Officer Position. I found that FMS created the PCFPT Officer Position to replace the position of “Senior QA/QC Technologist” that Ms Sevilla had occupied; and that the tasks Ms Sevilla performed in the position she occupied were to be performed by the person who would assume the PCFPT Officer Position.[39] These findings are to be viewed in the light of the following:
(a)FMS had employed Ms Sevilla on the basis that she was covered by the 2010EA.
(b)I did not accept Ms Standley’s evidence that the PCFPT Officer Position was a different position from the Senior QA/QC Technologist position Ms Sevilla held because Ms Standley gave no evidence about:[40]
(i)which of the duties Ms Sevilla had been performing had been “reallocated” to other employees, or the employees to whom those duties had been “reallocated”;
(ii)the tasks Ms Sevilla was performing which were not to be performed by any person; or
(iii)the identity of the person from within FMS’s “technical services management” with whom Ms Standley says she had discussed the functions that Ms Sevilla had carried out, and the functions that were to be carried out by the person who was to occupy the PCFPT Officer Position; and
(c)my finding that, at Ms Thompson’s interview in August 2012, Ms de Leeuw told Ms Thompson that although she could join the union, she would not be entitled to all the benefits Ms Sevilla had under the 2010EA, but that Ms Thompson would be under a contract like people in the office.[41]
[39] Thompson v Freshfood Management Services Pty Ltd [2023] FedCFamC2G 743, at [58]
[40] Thompson v Freshfood Management Services Pty Ltd [2023] FedCFamC2G 743, at [52]
[41] Thompson v Freshfood Management Services Pty Ltd [2023] FedCFamC2G 743, at [53], [58]
The effect of these matters is that by August 2012 FMS, having had engaged Ms Sevilla to perform tasks on the basis that she was covered by the 2010EA, decided that it would engage Ms Thompson to perform the same tasks, but on the basis that Ms Thompson would not be covered by the 2010EA; and that Ms Thompson would continue to perform those tasks on the basis that she would not be covered by any of the Enterprise Agreements.
It was within the power of FMS to call evidence that a person or persons with authority considered whether the tasks FMS was to engage Ms Thompson to perform in the PCFPT Officer Position, and which Ms Thompson did perform in that position, was or would not be covered by any of the Enterprise Agreements; and that, having considered that question, came to believe that the tasks Ms Thompson would be engaged to perform and which she did perform were not covered by any of the Enterprise Agreements. FMS, however, called no such evidence. That would remain the case even if I had accepted the evidence of Ms Standley that I set out in paragraph 51 of the earlier reasons. Ms Standley deposed that the PCFPT Officer Position was a new position; but Ms Standley did not say that she believed that the tasks associated with the new PCFPT Officer Position were not covered by any of the Enterprise Agreements, or that she sought any legal or any other advice about whether the tasks associated with the new position would be covered by any of the Enterprise Agreements.
That FMS has not adduced evidence that any person on behalf of FMS had considered the question whether the tasks FMS engaged Ms Thompson to perform as a PCFPT Officer were or would not be covered by any of the Enterprise Agreements renders it impossible to rationally find that it was through some error that FMS engaged Ms Thompson on the basis that she was not covered by any of the Enterprise Agreements. On the contrary, FMS’s failure to adduce such evidence is a basis for inferring, and I find, that, at most, FMS applied to Ms Thompson’s employment an unreasoned assumption that she was not, and would not be, covered by any of the Enterprise Agreements.
These matters point to the penalty being assessed at the higher end of the scale.
Nature and extent of any loss or damage
The loss Ms Thompson sustained as a consequence of the Hourly Rate Contravention was her not being paid money to which she was entitled. That totalled $112,801.96, which is a significant loss. This points to the penalty being assessed at the higher end of the scale.
Deterrence
It is true, as Ms Thompson submits, that FMS has not adduced any evidence that it has undertaken an audit to determine whether it has complied with industrial instruments that apply or may apply to its employees. That submission, however, assumes there is a basis for inferring that FMS ought to have undertaken such an audit. My having found that FMS has contravened the Enterprise Agreements in relation to Ms Thompson’s employment does not, by itself, provide a basis for inferring there is a prospect that FMS has failed to comply with industrial instruments that may apply to other employees; and that FMS, therefore, ought to have undertaken an audit.
I am not satisfied that the penalty should reflect an element of specific deterrence. There is nothing to suggest there is a tangible prospect FMS would knowingly contravene, or recklessly disregard its obligations under, the FW Act.
General deterrence is another matter. I have found that, at best, FMS applied to Ms Thompson’s employment an unreasoned assumption that she was not covered by any of the Enterprise Agreements; and that has had the consequence of causing Ms Thompson substantial loss. A penalty should be set to deter employers from omitting (and thus to encourage employers) to undertake such tasks as are reasonably necessary to identify the appropriate industrial instruments that apply to their employees and, where it is difficult to identify with reasonable certainty what industrial instrument applies, to take steps, either by negotiation with the employee or, if negotiation fails to resolve any difference of opinion, by some dispute resolution process, to identify the industrial instrument that applies to the employee.
Corrective action
FMS has paid to Ms Thompson in a manner acceptable to her the amount of compensation I ordered that FMS pay for its contraventions of s 50 of the FW Act, including the Hourly Rate Contravention. That is a matter that tends to reduce the penalty that it would otherwise be appropriate to assess.
It is the case that FMS has not expressed any contrition. That only means, however, that contrition is not available as a factor to reduce what would otherwise be an appropriate penalty.
Assessment (before adjustment)
I am satisfied that the appropriate penalty for FMS’s Hourly Rate Contravention is $45,000.
ANNUAL LEAVE LOADING CONTRAVENTION (BEFORE ADJUSTMENT)
The contravention identified in paragraph 4 of the Declarations consists of FMS not paying to Ms Thompson an annual leave loading as it was required to do under the Enterprise Agreements (Annual Leave Loading Contravention). The amount FMS failed to pay was $7,377.36.
FMS’s failure to pay annual leave loading is wholly derivative from its having engaged Ms Thompson on the unreasoned assumption that she was not covered by any of the Enterprise Agreements. For that reason, the matters I have concluded are relevant to assessing the penalty for the Hourly Rate Contravention apply to the Annual Leave Loading Contravention, acknowledging, however, that the loss of $7,377.36 occasioned by this contravention is significantly less than the $112,801.96 occasioned by the Hourly Rate Contravention.
I am satisfied that the appropriate penalty for FMS’s Annual Leave Loading Contravention (without adjustment) is $15,000.
REDUNDANCY PAY CONTRAVENTION (BEFORE ADJUSTMENT)
The contravention identified in paragraph 5 of the Declarations consists of a failure to make one payment of $90,492.18, being the redundancy FMS was required to pay to Ms Thompson under cl 22.8.1 of the 2019EA (Redundancy Pay Contravention).
FMS’s failure to pay redundancy is wholly derivative from its having engaged Ms Thompson on the unreasoned assumption that she was not covered by any of the Enterprise Agreements. For that reason, the matters I have concluded are relevant to assessing the penalty for the Hourly Rate Contravention apply to the Redundancy Pay Contravention, acknowledging, however, that the loss of $90,492.18 occasioned by this contravention is less than the $112,801.96 occasioned by the Hourly Rate Contravention, and that the contravention consists of one omission.
I am satisfied that the appropriate penalty for FMS’s Redundancy Pay Contravention (without adjustment) is $40,000.
ADJUSTMENTS?
Each of FMS’s contraventions of s 50 of the FW Act is wholly derivative from its having engaged Ms Thompson on the assumption that she was not covered by any of the Enterprise Agreements. Thus, an important element that is common to my (unadjusted) assessment of a pecuniary penalty for each of the Hourly Rate Contravention, the Annual Leave Loading Contravention, and the Redundancy Pay Contravention, is FMS’s engaging Ms Thompson on the unreasoned assumption that the Enterprise Agreements did not apply to Ms Thompson’s employment. This common element should be taken into account under the “one transaction principle”. In my view, each of the penalties I have (provisionally) assessed should be reduced by 35% to take into account this common element. Taking this reduction into account, the penalties are as follows:
Contravention
Penalty (before adjustment)
Penalty (after 35% adjustment)
Hourly Rate Contravention
$45,000
$29,250
Annual Leave Loading Contravention
$15,000
$9,750
Redundancy Pay Contravention
$40,000
$26,000
TOTAL
$100,000
$65,000
I am satisfied that no further adjustment should be made under the totality principle. I am satisfied, however, that a further 10% should be deducted in relation to the Hourly Rate Contravention and the Annual Leave Loading Contravention to reflect the lower value of the penalty unit that applied during the period in which those contraventions occurred. Taking that adjustment into account, I assess penalties as follows:
Contravention
Penalty (after 35% adjustment)
Penalty (after additional 10% adjustment)
Hourly Rate Contravention
$29,250
$26,325
Annual Leave Loading Contravention
$9,750
$8,775
Redundancy Pay Contravention
$26,000
$26,000
TOTAL
$65,000
$61,100
I am therefore satisfied that FMS should be ordered to pay pecuniary penalties in the amount of $26,325, $8,775, and $26,000 respectively for the Hourly Rate Contravention, the Annual Leave Loading Contravention, and the Redundancy Pay Contravention.
TO WHOM PENALTIES SHOULD BE PAID
Subsection 546(3)(c) of the FW Act provides that the Court may order that a pecuniary penalty be paid to a “particular person”. Ms Thompson is in the position of the applicant in Sayed v Construction, Forestry, Mining and Energy Union:[42]
In this appeal . . . the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If [the applicant] had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.
[42] Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4, at [116]
It is appropriate I make an order under s 546(3)(c) of the FW Act that FMS pay the penalties I propose to order to Ms Thompson.
DISPOSITION
I propose to order that FMS pay to Ms Thompson the pecuniary penalties I have determined it is appropriate that FMS pay, and that it do so within 28 days after the day on which I pronounce my orders.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 23 November 2023
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