Wibowo v Vehicle Monitoring Systems Pty Ltd
[2023] FedCFamC2G 47
Federal Circuit AND FAMILY Court of Australia (DIVISION 2)
Wibowo v Vehicle Monitoring Systems Pty Ltd [2023] FedCFamC2G 47
File number: MLG 2987 of 2020 Judgment of: JUDGE RILEY Date of judgment: 1 February 2023 Catchwords: INDUSTRIAL LAW – penalty for adverse action – deliberate dismissal of employee by company director – no evidence of genuine remorse – need for deterrence – claim for compensation for financial and non-financial losses. Legislation: Fair Work Act 2009 ss.340(1), 539(2), 546. Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson (2022) 175 ALD 383; (2022) 399 ALR 599; (2022) 314 IR 301; [2022] HCA 13
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 4
Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Malec v Hutton (1990) 169 CLR 638; [1990] HCA 20
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Symons v Paperless Warehousing Pty Ltd (No 2) [2022] FedCFamC2G 504
Wibowo v Vehicle Monitoring Systems Pty Ltd [2022] FedCFamC2G 23.
Division: Division 2 General Federal Law Number of paragraphs: 63 Date of hearing: 19 December 2022 Place: Melbourne Advocate for the applicant: In person Solicitor for the applicant: None Counsel for the respondent: Ella Dalrymple (by direct brief) Solicitor for the respondent: None ORDERS
MLG 2987 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ERWIN WIBOWO
ApplicantAND: VEHICLE MONITORING SYSTEMS PTY LTD
(ACN 107 396 136)
Respondent
order made by:
JUDGe riley
DATE OF ORDER:
1 february 2023
THE COURT ORDERS THAT:
1.Pursuant to s.546(1) of the Fair Work Act 2009, the respondent pay to the applicant a pecuniary penalty fixed in the sum of $31,500.
2.There be no order for the payment of compensation.
Note: The form of the order is subject to the entry in the court’s records.
Note:This copy of the court’s reasons for judgment may be subject to review 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
JUDGE RILEY:
Introduction
This matter concerns the penalties to be imposed for a contravention of the Fair Work Act 2009 (“the Act”) and compensation for financial and non-financial losses. In Wibowo v Vehicle Monitoring Systems Pty Ltd [2022] FedCFamC2G 23, the court declared that:
The respondent contravened s.340(1) of the Fair Work Act 2009 (“the Act”) by dismissing the applicant because he had exercised his workplace right to make a complaint in relation to his employment.
The complaint was essentially that he was required to work outside his role as a data analyst and he was being overworked.
MATERIAL RELIED UPON
At the penalty and compensation hearing before this court, the applicant (“Mr Wibowo”) relied upon:
(a)his written submissions on penalty filed on 23 February 2022;
(b)his submissions in reply filed on 11 April 2022;
(c)his affidavit sworn on 11 October 2022; and
(d)the affidavit of Dr Prasanna sworn on 19 October 2022.
The respondent (“VMS”) relied upon:
(a)its written submissions on penalty filed on 23 March 2022, except for the first sentence of paragraph 24; and
(b)the affidavit of Fraser Welch affirmed on 23 March 2022.
penalties for breach of civil remedy provisions
Section 546(1) of the Act provides that this court may order a person to pay a pecuniary penalty for a breach of a civil remedy provision. Subsection 546(2) of the Act provides that the penalty cannot be more than the amount calculated in accordance with s.539(2) of the Act for an individual, and five times that amount for a corporation. Subsection 539(2) of the Act is expressed in terms of penalty units and prescribes that the maximum penalty for a contravention of s.340(1) is 60 penalty units. Five times that number is 300 penalty units. A penalty unit at the time of the breach was fixed in the sum of $210. That means that the maximum penalty payable by VMS is $63,000. Mr Wibowo submitted that the court should order a penalty of about $50,000. VMS said that the court should order a penalty of no more than $7,000.
the purpose of civil penalties
In Australian Building and Construction Commissioner v Pattinson (2022) 175 ALD 383; (2022) 399 ALR 599; (2022) 314 IR 301; [2022] HCA 13, all the members of the High Court, except Edelman J, said that:
[9]… Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU’s non-compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.
[10]The Full Court’s critical error was that it 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. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that 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. Nothing 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). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That 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.
…
[15]Most importantly, it has long been recognised that, unlike criminal sentences, civil penalties are imposed primarily, if not solely, for the purpose of deterrence. The plurality in the Agreed Penalties Case said:
[W]hereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd , is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of the penalties imposed by s 76 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.”
(citations omitted)
proportionality
In Pattinson, the High Court addressed the question of proportionality as follows:
[40]Nothing in the text, context or purpose of s 546 of the Act suggests that the Full Court’s “notion of proportionality” inheres in the court’s task, pursuant to s 546, to fix a penalty which it considers to be an “appropriate” penalty. The discretion conferred by s 546 is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation. In a civil penalty context, Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission said:
“[I]nsistence upon the deterrent quality of a penalty should be balanced by insistence that it ‘not be so high as to be oppressive’. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression.”
[41]It may therefore be accepted that s 546 requires the court to ensure that the penalty it imposes is “proportionate”, where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity. It is in this sense that the Full Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd used the term “proportionality”, when their Honours said:
“If it costs more to obey the law than to breach it, a failure to sanction contraventions adequately de facto punishes all who do the right thing. It is therefore important that those who do comply see that those who do not are dealt with appropriately. This is, in a sense, the other side of deterrence, being a dimension of the general deterrence equation. This is not to give licence to impose a disproportionate or oppressive penalty, which cannot be done, but rather to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance.” (emphasis added)
[42]However, the Full Court’s “notion of proportionality” derived from Veen (No 2) is something quite different. That notion cannot be reconciled with the decisive statements in the Agreed Penalties Case that civil penalties are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions. To introduce considerations drawn from theories of retributive justice into the application of s 546 of the Act undermines the primary significance of deterrence.
…
[46]It does not follow, as the Full Court suggested and as the CFMMEU argued in this Court, from the rejection of the Full Court’s “notion of proportionality” that s 546 must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender. It is important to recall 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. A contravention may be a “one-off” result of inadvertence by the contravenor rather than the latest instance of the contravenor’s pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions.
[47]The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors of the kind adverted to by French J in CSR. For example, where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.
…
[50]This Court’s reasoning in the Agreed Penalties Case is distinctly inconsistent with the notion that the maximum penalty may only be imposed in respect of contravening conduct of the most serious kind. Considerations of deterrence, and the protection of the public interest, justify the imposition of the maximum penalty where it is apparent that no lesser penalty will be an effective deterrent against further contraventions of a like kind. Where a contravention is an example of adherence to a strategy of choosing to pay a penalty in preference to obeying the law, the court may reasonably fix a penalty at the maximum set by statute with a view to making continued adherence to that strategy in the ongoing conduct of the contravenor’s affairs as unattractive as it is open to the court reasonably to do.
(citations omitted)
Approach to determining penalty
Bromwich J summarised the proper approach to determining penalty in cases such as this in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 at [36] as follows:
(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 (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) 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: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(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.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by the High Court at [19] of Pattinson as follows:
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.
(citations omitted)
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Step 1: identifying the breaches
As stated above, VMS breached s.340(1) of the Act by dismissing Mr Wibowo because he had exercised his workplace right to make a complaint in relation to his employment.
Step 2: single course of conduct
The breach in the present case was a single breach, so the course of conduct considerations do not apply.
Step 3: grouped breaches
This step does not apply in the present case as there was only one breach.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breach
There was one breach, being VMS’s dismissal of Mr Wibowo because he had exercised his workplace right to make a complaint in relation to his employment. Mr Wibowo complained by email about his work duties and was dismissed the following day.
b. the circumstances in which that conduct took place
Mr Wibowo said that he was in a vulnerable state at the time of his dismissal, and VMS should have been aware of that, because he said in his email that VMS’s expectations of him had impacted his work-life balance. I do not accept this submission. Saying that work duties have impacted a person’s “work-life balance” does not necessarily mean that the person is vulnerable. It just means that they are uncomfortable with the number of hours they are working. Over a prolonged period, that might make some people vulnerable. However, in itself, saying one’s work duties have impacted one’s work-life balance does not imply that one is vulnerable.
VMS said that it was under financial pressure at the time of the dismissal. VMS provided evidence that it was not profitable. However, it was not trading while insolvent because, like Uber, investors continued to support it. I do not consider VMS’s financial position to be particularly significant in all the circumstances of this case.
c. the nature and extent of any loss or damage sustained
Mr Wibowo lost his job. He found another job after a few weeks, at a higher rate of pay. He was no doubt emotionally impacted by being dismissed. The loss and damage is discussed below under the heading “Compensation”.
d. whether there had been similar previous conduct
Mr Wibowo did not suggest that VMS had engaged in any similar conduct previously.
e. whether the breaches arose out of the one course of conduct
There was a single breach, which Mr Wibowo accepts arose from a single course of conduct.
f. the size of the business enterprise involved
It was common ground that VMS was a small business. At the time of the breach, it had 10 employees, including two of its three directors.
However, as Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level”.
(footnote omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, the court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.
g. whether or not the breaches were deliberate
VMS conceded that the breach, being the termination of Mr Wibowo’s employment, was deliberate. However, VMS argued that it had not been established that VMS was aware that the termination contravened the law and the termination was not pre-planned. Even so, the breach was deliberate, in the sense that it did not occur as the result of an accident or mistake.
h. whether senior management was involved in the breach
VMS conceded that senior management was involved in the breach. VMS argued at [33] of its written submissions that:
… Given the size of the Respondent’s business, it is difficult to understand how an employee would be terminated by anyone but senior management. In the circumstances, the Applicant’s reliance on this factor alone is not persuasive of the action being at the more serious end of the range of seriousness.
The issue about senior management is that, if senior management is involved, the corporation should be held more accountable than if, for example, the breach was perpetrated by a rogue employee or the breach was the result of a previously undetected system error.
In the present case, senior management was definitively involved in the breach.
i. contrition, corrective action and co-operation with the authorities
VMS did not show contrition through admitting its breach at the first opportunity. Indeed, VMS denied any wrong doing throughout the lengthy pre-trial period, and contested the matter at a liability hearing.
In his affidavit affirmed on 23 March 2022, Mr Welch, the director of VMS who terminated Mr Wibowo’s employment, said:
5.The Respondent regrets the series of events leading to the unfair termination of the employment of the Applicant.
6.As a result of these proceedings, the Respondent now appreciates the seriousness of an employer’s obligation not to take adverse action for a protected reason.
7.To ensure that the same mistake is not repeated, the Respondent has implemented new human resources policies and procedures which address in particular: (i) routine employee performance management and (ii) proper management of employee grievance complaints.
Regretting a series of events is not the same as contrition. Usually, in the present context, regretting a series of events means regretting being found to have breached the law. There has been no indication that VMS has apologised to Mr Wibowo.
In relation to the corrective action alleged by Mr Welch, in response to questions from the court at the penalty hearing, Mr Welch said that the new policies and procedures were just notes, not a formal document that had been circulated to staff. He said that the new policies and procedures were implemented by him listening to people. This does not amount to substantial corrective action.
j. the need to ensure compliance with minimum standards
This factor is not applicable.
k. the need for specific and general deterrence
I note the extracts from Pattinson set out above. In addition, in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 46, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [55]:
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 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.”
(footnotes omitted)
Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3, Keane, Nettle and Gordon JJ said at [116]:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty’s general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
(footnotes omitted)
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty…
(footnotes omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said at [9]:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ….
VMS conceded that both specific and general deterrence were relevant factors in this case. However, it argued that its involvement in the present case would have a significant deterrent effect. I accept that the difficulty of being involved in litigation would have some, but not enough, deterrent effect on VMS.
In oral submissions, VMS relied on Symons v Paperless Warehousing Pty Ltd (No 2) [2022] FedCFamC2G 504, where Judge Manousaridis said at [30]:
… 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.
VMS argued that the present case is of the first kind to which Judge Manousaridis referred, that is, an inadvertent, one-off contravention. The contravention in the present case was a one-off breach, but it was not inadvertent. In any event, each court must consider the particular facts before it to arrive at the appropriate penalty.
Other issues
I do not consider that there are any other relevant issues in this case.
Conclusion on appropriate penalty
In my view, the appropriate penalty in the present matter is $31,500. That reflects particularly the facts that:
(a)there was a single, deliberate breach that senior management was involved in;
(b)the breach was substantial, causing Mr Wibowo to lose his job for voicing concerns about the nature of his duties and his workload;
(c)VMS has no prior history;
(d)VMS has shown no genuine remorse and put Mr Wibowo to the trouble of a court hearing on liability;
(e)VMS did not demonstrate that it has done anything substantial to ensure it does not repeat its contravention, though it may be accepted that its experience of this litigation will make it more careful next time;
(f)as VMS is still operating, there is a need for specific deterrence; and
(g)there is a need for general deterrence.
Step 5: the totality principle
There is no need to undertake the check that is required by the totality principle, as there was only a single contravention.
compensation
Mr Wibowo sought compensation for financial loss and non-financial loss.
Financial loss – salary and superannuation
Mr Wibowo claimed lost wages from his last day of employment with VMS, being 10 March 2020, until the first day of his employment with Capgemini on 8 July 2020. He said that amounted to 45 working days. He said he earned $1,140 per week at VMS, which works out to a loss of $10,260 in base salary. Mr Wibowo also said that, at 9.5%, he also lost superannuation of $975.
On the salary and superannuation point, VMS said in paragraph 3 of its written submissions that:
The Applicant is entitled to compensatory damages, subject to mitigation, equivalent to the wages he would have received under the Contract from the date of dismissal to when the Contract would have ended, but for the adverse action.2 The approach to calculating this loss is as follows:
a. Determining past economic loss;
b.Determining future economic loss by reference to the likely length of employment;
c. Deducting an amount for contingencies;
d. Deducting an amount for alternative employment; and
e. Grossing up the amount for taxation.3
FN 2:Re Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20 at 32.
FN 3:Construction, Forestry, Mining and Energy Union (CFMEU) v Hail Creek Coal Pty Ltd [2016] FCA 1032 [55] – [64].
Mr Wibowo provided a payslip from his employment at VMS showing that his annual salary was $59,280 and his weekly gross pay was $1,140. He was employed under a contract that VMS accepted could have continued for a year or more.
However, Mr Wibowo obtained a fixed term position with Capgemini for eight weeks starting on 27 April 2020 and lasting until 19 June 2020. His gross pay was $85,000 per annum inclusive of superannuation. That works out to a gross salary of about $77,000 per annum, or $1,500 per week. That is about $360 per week more than he was earning at VMS. For the eight weeks, that amounted to about $2,800 gross more than he earned with VMS.
Mr Wibowo then seems to have had a three week break, and started working for Capgemini on a permanent full-time basis on 8 July 2020. Mr Wibowo did not provide evidence about how much he earned as a permanent full-time employee of Capgemini. However, there is no reason to suppose that it was less than he earned on the fixed term contract with Capgemini.
In summary, Mr Wibowo had no salary between 10 March 2020 and 27 April 2020. In his written submissions in reply, Mr Wibowo did not claim anything for the period between 19 June 2020 and 8 July 2020. He claimed 35 days between 11 March 2020 and 28 April 2020, amounting to $7,980 in lost salary and $758.10 in lost superannuation.
However, the difficulty is that, because he was dismissed from his employment at VMS, he obtained another job at a higher salary than he received at VMS. He continued working at Capgemini until August 2022, a period of about two years. Between July 2020 and August 2022, he would have earned about $37,440 more at Capgemini than he would have earned if he had continued working at VMS. In these circumstances, I am not satisfied that being dismissed from VMS caused Mr Wibowo a loss of salary or superannuation.
Financial loss – medical expenses
Mr Wibowo claimed that being dismissed by VMS caused him to have mental health issues. In his submissions dated 23 February 2022, Mr Wibowo claimed $325 for radiology on 13 March 2020, and $2,250 for psychiatric expenses between March 2020 and July 2021. However, during closing oral submissions, Mr Wibowo excluded $550 for a psychiatric report, as it was a legal cost, thereby reducing his claim for psychiatric expenses to $1,700.
In relation to the radiology, Mr Wibowo said he was stressed on 13 March 2020 and had a brain scan. He acknowledged himself that the brain scan showed no abnormalities. In the absence of any abnormality, and in the absence of any expert evidence linking Mr Wibowo’s perceived stress to any action by VMS, it is not possible to conclude that VMS should compensate Mr Wibowo for the cost of the radiology.
In relation to psychiatric treatment, VMS did not dispute that Mr Wibowo had received psychiatric treatment or had incurred the claimed costs following his dismissal. However, the psychiatrist noted in his report that Mr Wibowo had previously been his patient, between June 2015 and August 2018. At that time, he was diagnosed with obsessive compulsive disorder with anxiety and distress. He was treated with medication, which resulted in a 90% improvement.
In his report dated 24 October 2020, the psychiatrist diagnosed Mr Wibowo with a recent worsening of his obsessive compulsive disorder symptoms. The psychiatrist attributed that to his dismissal from VMS. The psychiatrist attributed the continuation of Mr Wibowo’s worsened symptoms to the Covid-19 pandemic.
In summary, Mr Wibowo had a pre-existing condition which was worsened by VMS’s actions, and that worsening was maintained by the Covid-19 pandemic.
In Malec v Hutton (1990) 169 CLR 638; [1990] HCA 20, the High Court essentially held that, where there is a pre-existing condition, the court must consider the degree of probability that the pre-existing condition would have resulted in the damage sought to be compensated for, if the respondent had not in fact caused that damage.
Unfortunately, the psychiatrist in the present case did not address that question. What is clearly established is that Mr Wibowo had a pre-existing condition consisting of obsessive compulsive disorder. That condition was worsened by his dismissal by VMS. The worsening continued because of the Covid-19 pandemic.
What is not known is how long the worsening of the condition lasted before its continuation was caused by the Covid-19 pandemic. It is also not known whether the Covid-19 pandemic alone would have worsened Mr Wibowo’s symptoms, even if he had not been dismissed by VMS. In the absence of expert evidence on those questions, it is impossible to know how much, if any, of the amounts incurred by Mr Wibowo for psychiatric treatment were actually attributable to VMS’s dismissal of him, or whether they were attributable to the combination of Mr Wibowo’s pre-existing condition and the Covid-19 pandemic.
I consider that, in these circumstances, it would not be appropriate to require VMS to pay any compensation for Mr Wibowo’s psychiatric treatment.
Non-financial loss
Mr Wibowo claimed $25,000 for non-financial loss consisting of the worsening of his obsessive compulsive disorder symptoms and loss of work enjoyment. He claimed that these matters had impacted on his work performance at Capgemini. However, he also said in oral evidence that he was able to fulfil all of the requirements of his job at Capgemini.
Applying Malec v Hutton, and for the reasons discussed above, it is impossible to assess a proper amount of compensation, if any, for non-financial loss. I am left with no option but to award no amount of compensation for non-financial loss.
Conclusion
There will be orders accordingly.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 1 February 2023
0
19
0