Whelan v Cigarette & Gift Warehouse [2019] FCA 2064
File number:
QUD 987 of 2015
Judge:
COLLIER J
Date of judgment:
13 December 2019
Catchwords:
INDUSTRIAL LAW – penalty hearing – court determination of penalties to be imposed – broad discretion to determine quantum of penalties to be imposed – relevant considerations in determining appropriate penalties – whether penalty is proportionate to the offence – whether penalties should be paid to the applicant
COSTS – application by both parties under s 570 of the Fair Work Act 2009 (Cth) for an award of costs – where applicant was not successful on all grounds – allegation of objectionable material – whether parties acted unreasonably – where both parties did not rely on certain witnesses at trial – withholding statutory entitlements – percentage of costs awarded on a party and party basis
Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission[2006] FCAFC 199; (2006) 156 FCR 275
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Whelan v Cigarette and Gift Warehouse [2019] FCA 2064
Case
[2019] FCA 2064
Decision Date
CaseChat Overview and Summary
In the matter of Whelan v Cigarette and Gift Warehouse, the Full Court of the Federal Court of Australia was tasked with determining the quantum of pecuniary penalties to be imposed on the respondents for breaches of the Fair Work Act 2009 (Cth) and the allocation of costs between the parties. The primary judge had previously found that the respondents contravened several sections of the FW Act, including taking adverse action against the applicant, failing to provide payment in lieu of notice for termination, and failing to pay unused paid annual leave. The applicant sought penalties and costs, while the respondents argued for lower penalties and sought to have the applicant’s costs application dismissed.
The court considered the appropriate considerations for determining the quantum of penalties, including the gravity of the breach, the culpability of the respondents, and the need for deterrence and retribution. The court emphasised its broad discretion in determining the penalty amount, taking into account whether the penalty was proportionate to the offence and whether it should be paid to the applicant. The applicant argued that the penalties should reflect the deliberate and conscious attack on his integrity and credibility, while the respondents contended that any penalty should be proportionate to the sum withheld and that an award of penalties in the amount sought would amount to double compensation.
The Full Court found that the penalties imposed should be proportionate to the breaches and the culpability of the respondents. The court ordered that the first respondent pay pecuniary penalties of $75,000 and the second respondent pay $15,000. The court also ordered that the penalties be paid to the applicant within 28 days. In relation to costs, the court ordered the respondents to pay 10% of the applicant’s costs of the proceedings, with a specific timetable for the filing of affidavits and submissions. The court concluded that both parties had acted unreasonably in various respects, but the applicant’s unreasonable conduct did not warrant a refusal of his costs application. The court also noted that the applicant had been awarded compensation for the proven breaches, which should be considered in determining the appropriate penalty amount.
Orders
Orders of the court
1. The First Respondent pay pecuniary penalties totalling $75,000.00.
2. The Second Respondent pay pecuniary penalties totalling $15,000.00.
3. The penalties referred to in paragraphs 1 and 2 of these orders be paid by the Respondents to the Applicant within 28 days of the date of these orders.
4. The Respondents pay 10% of the Applicant’s costs of the proceedings, such costs to be consolidated in accordance with Practice Note GPN-COSTS (Practice Note), and the parties to proceed in accordance with the Practice Note as per the following timetable:
(a) The Applicant file an affidavit in support of his lump sum costs claim (such affidavit to be no more than 10 pages) by 4.00pm on 20 December 2019;
(b) The Respondents file an affidavit in response (such affidavit to be no more than 10 pages), and any submissions limited to the legal questions (such submissions to be no more than 3 pages) by 4.00pm on 24 January 2020;
(c) The Applicant file any submissions limited to the legal questions (such submissions to be no more than 3 pages) by 4.00pm on 31 January 2020.
5. Any dispute between the parties concerning the costs order herein be referred to a Registrar pursuant to paragraph 4.9 of the Practice Note.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
On 19 December 2017, I delivered judgment in Whelan v Cigarette & Gift Warehouse Pty Ltd [2017] FCA 1534 (the primary judgment). The background facts are set out in detail in that judgment. In summary, I found that the first respondent, Cigarette & Gift Warehouse Pty Ltd, had contravened the following provisions of the Fair Work Act 2009 (Cth) (the FW Act):•Section 340(1) of the FW Act by taking adverse action against the applicant;•Section 44(1) of the FW Act by failing to provide payment in lieu of notice for termination in accordance with s 117(2) of the Act; and•Section 44(1) of the FW Act by failing to pay the applicant amounts owing to him on termination with respect to unused paid annual leave in accordance with s 90(2) of the FW Act. I also found that the second respondent, Mr Travers Beynon, was involved in those contraventions. It follows that there are, in total, six contraventions by the respondents. In the applicant’s Third Further Amended Statement of Claim dated 10 March 2017, the applicant sought both costs and the imposition of pecuniary penalties on the respondents for any breaches of the FW Act. The applicant also sought the imposition of pecuniary penalties on the respondents for contravention of Australian Consumer Law. The respondents did not contravene the ACL, therefore the issue of pecuniary penalties only arises in connection with the contraventions identified above. The respondents appealed to the Full Court of the Federal Court of Australia on 12 January 2018. On 1 February 2018, I ordered that the hearing on costs and quantum of penalties be listed on a date to be fixed following the final determination of the respondents’ appeal. On 8 February 2019, the Full Court dismissed the respondents’ appeal and reserved costs. On 18 March 2019, I ordered that the matter be listed for hearing on costs and quantum of penalties for half a day on 12 June 2019. The parties have made both oral and written submissions in relation to penalties and costs. The respondents also rely on the affidavit of Brendan Nyst dated 9 May 2019.SUBMISSIONS OF THE PARTIESPenalties In respect of penalties, the applicant submitted, in summary: ·Both respondents should be penalised for their part in the contraventions of the FW Act. ·In the week prior to the hearing, the respondents amended their Defence to include a list of new alleged reasons for the termination of the applicant’s employment, which were never alleged in the termination letter and were not pleaded or raised at any time before. ·This was a clear example of an employer fabricating evidence to suit its own case.·The respondents’ actions were a deliberate and conscious attack on the applicant, his integrity and his credibility, accusing him of something which had no basis.·The penalties should be paid to the applicant consistent with s 546 of the FW Act and are appropriate in the circumstances where:•The respondents summarily dismissed the applicant based on a false and fabricated event which they knew to be false at the time;•There was a continued failure of the respondents to pay statutory entitlements owed to the applicant;•The applicant had to prosecute these proceedings at great expense and personal cost; and•The usual order was that payment of penalties be made to the person applying for the penalty.·In response to the submission by the respondents that if a Court awards a sum in the form of a penalty, and that sum is paid to the applicant, he would receive double compensation, s 546(5) clarifies that the Court may impose penalties in addition to any orders made under s 545, and that this may be payable to a particular person: s 546(3). ·The contraventions found by the Court were aggravated by the deliberate conduct of the respondents, and that conduct and its consequences should be reflected in the quantum of penalties awarded.
Ratio Decidendi
Legal Principle Established
In relation to penalties the respondents submitted, in summary, as follows: ·The applicant was dismissed for a multitude of reasons, including because the second respondent considered Mr Whelan unreliable and his performance poor, exacerbated by repeated requests by Mr Whelan for more money by way of bonus payments or the development of a bonus plan. ·The applicant’s claims for contravention under s 340 of the FW Act were substantially broader than those upheld in the findings of the Court.·The applicant’s submissions fail to draw any material distinction between the proven contravention of s 340 and the proven contraventions of s 44 in relation to unpaid leave and salary. ·Any penalty ordered should be combined. ·The applicant’s dismissal falls at the lowest end of this kind of conduct, taking into consideration the fact that the contract entitled the dismissal of the applicant at any time without reason, and noting that if he had been dismissed without adverse action, he would be in precisely the same position: see [280] and [308] of the primary judgment.·In relation to withholding unpaid leave entitlements, the payments were withheld on the basis that Mr Whelan had withheld company documents, having copied the contents of his work computer onto his personal computer and concealed this from his employer. This should be taken into consideration when having regard to any penalty to be imposed for the withholding of these benefits.·An award of penalties in the amount sought by the applicant would be tantamount to double compensation. ·The applicant’s unused leave entitlements totalled $17,160.40. This amount was not significant having regard to the fact the applicant was on a salary exceeding $300,000 and there was no suggestion on the evidence, or any finding made, that the deprivation of these monies to him was some substantial impost in the circumstances. Evidence before the Court suggested that he had found employment elsewhere. ·Any penalty ought to be proportionate to the sum withheld. A figure of one third of the maximum penalty was appropriate and the respondents would submit to such an order. ·Any penalty should be paid into Consolidated Revenue because the applicant himself has, in respect of the proven breaches, been awarded compensation as well as interest which will be full indemnity for the consequences to him of the unlawful conduct. CONSIDERATION: PENALTIES Section 546 of the FW Act empowers the Court to order a person to pay a pecuniary penalty that the Court considers appropriate once satisfied that the person has contravened a civil remedy provision. The maximum penalty prescribed for a contravention of each provision is 300 penalty units for a body corporate, and 60 penalty units for an individual: see ss 539(2) and 546(2). The value of a penalty unit at the relevant time, being August 2015, was $180: see s 12 of the FW Act and s 4AA(1) of the Crimes Act 1914 (Cth). It follows that the maximum pecuniary penalty available for each contravention by the first respondent is $54,000.00 and by Mr Beynon, $10,800.00. The Court may order that any pecuniary penalty be paid to the Commonwealth or to a particular person: see s 546(3)(a).