WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES SPRING 2002 PTY LTD

APPELLANT

-and-

Katherine Sampson

RESPONDENT

CORAM FULL BENCH

The Honourable M T Ritter, Acting President

Chief Commissioner A R Beech

Commissioner P E Scott

HEARD Tuesday, 5 December 2006; FINAL WRITTEN SUBMISSIONS RECEIVED ON 10 JANUARY 2007 AND 12 JANUARY 2007

DELIVERED wednesday, 7 february 2007

FILE NO. FBA 30 OF 2006

CITATION NO. 2007 WAIRC 00083

CatchWords Industrial Law (WA) - Appeal against decision of Industrial Magistrate's Court - Assessment of underpayment - Error in calculation of underpayment - Whether issue raised in notice of appeal - Relevance of amount of underpayment to amount of penalty - Role of Full Bench in reviewing a penalty order - Whether penalty ought to be reduced - Appeal upheld - Industrial Relations Act 1979 (WA) (as amended), s83, s83(4), s84 Industrial Magistrates Court (General Jurisdiction) Regulations 2005, r.12

Decision Appeal upheld, orders made by Industrial Magistrate’s Court set aside

Appearances

Appellant Mr D Johnston, as agent

Respondent Mr G McCorry, as agent

Supplementary Reasons for Decision

THE FULL BENCH:

1         In this appeal the primary reasons of the Full Bench were published on 20 December 2006.  On the same date a minute of proposed order was published.  Neither party wished to speak to the minute and so accordingly on 5 January 2007 an order was made “that the parties shall within 7 days make written submissions as to the orders which should be made by the Full Bench”. 

2         The context within which this order was made was set out in paragraph [67] of the reasons for decision of Ritter AP which were agreed with by Commissioner Scott.  Chief Commissioner Beech differed with one aspect of the reasons of Ritter AP, but agreed with the disposition of the appeal. 

3         Paragraph [67] of the reasons for decision of Ritter AP was as follows:-

“The appellant submitted that if the Full Bench reached the conclusions I have, it would be appropriate to allow the appeal and remit the matter to the Industrial Magistrate’s Court for further consideration.  The respondent submitted that this was not necessary as the appellant and the respondent should be able to agree as to the orders which should now be made by the Full Bench.  In my opinion, the latter course is preferable if it can be achieved.  Accordingly, it is appropriate to allow the parties 7 days to provide written submissions on the orders which should be made by the Full Bench.  If an agreed position can be reached then this can be conveyed in writing to the Full Bench.  I note that the appellant did not make any submissions as to whether the Full Bench should interfere with the penalty order made by the Industrial Magistrate if it reached the conclusions which I have.  This issue can also be addressed in the written submissions of the parties which I have referred to.”

4         Pursuant to the order, the respondent filed written submissions on 10 January 2007 and the appellant on 12 January 2007.  These reasons set out the result of a conference and agreement between the parties. 

5         The following was agreed:-

(a) The amount of underpayment of wages by the appellant to the respondent was $2189.66 gross. 

(b) The amount of interest payable pursuant to regulation 12 of the Industrial Magistrates Court (General Jurisdiction) Regulations 2005 was $295.61. 

(c) The amount of disbursements incurred by the respondent in making the claim at first instance was $72.00. 

6         The parties did not agree upon any order which should be made by the Full Bench about the penalty imposed by the Industrial Magistrate.  The order made by the Industrial Magistrate was that a “penalty of $750.00 is imposed upon the Respondent for its breach of the award which shall be paid to the Claimant”. 

7         The appellant accepts that the exercise of the discretion by the Industrial Magistrate in deciding the amount of the penalty was not the subject of a ground of appeal.  The appellant submits however that given the reduced quantum of the underpayment made by the appellant to the respondent, the quantum of the penalty imposed should be varied.  It was submitted that where a penalty is imposed on an employer for breach of an award, the penalty should be proportional to the breach.  (Oliver & Oliver t/a Club Sierra v LHMU (1994) 74 WAIG 2637).  It was submitted that the quantum of underpayment determined by the Industrial Magistrate was $4571.18 and the penalty imposed was $750.00.  The same penalty was imposed by the Industrial Magistrate in claim M 152 of 2005 which was heard concurrently with the matter the subject of the appeal and where the underpayment to the respondent was determined to be $4018.58.  It was submitted that the amount of the underpayment to the respondent, assessed in accordance with the reasons for decision of the Full Bench in the present matter, is approximately half of that determined by the Industrial Magistrate.  The appellant submits therefore that the penalty imposed should be similarly reduced.  A draft order was filed with the submissions.  The draft order contained a penalty of $375.00. 

8         In contrast, the respondent submitted that any change in the amount of the underpayment found to have occurred is not a material consideration in determining an appropriate penalty.  The respondent cited McCorry v Bolivia Nominees Pty Ltd t/a Ballajura Tavern (1992) 72 WAIG 2521 at 2524.  It was submitted the penalty order should not be disturbed. 

9         In the alternative it was submitted that the penalty imposed, as a discretionary order, was an appropriate exercise of the court’s discretion given that:-

(a) The underpayments occurred over a lengthy period. 

(b) The appellant’s evident knowledge that the award applied and the respondent was being paid less than the award required, was capable of being inferred by the appellant’s efforts to get the respondent to enter into an Australian Workplace Agreement (AWA), the only practical purpose of which was to remove an employer from the obligations imposed by an award. 

(c) The lack of any mitigating circumstances. 

(d) The need for there to be a sufficient deterrent to others. 

(e) The wholly inadequate maximum penalty of $2000.00 that can be imposed.

10      The respondent therefore submitted for these additional reasons that the penalty order should not be disturbed. 

11      In our opinion the Bolivia Nominees case does not support the proposition advanced by the respondent.  There the Full Bench was concerned with an appeal against penalties imposed against the respondent in two complaints.  Both complaints involved the failure of the respondent to maintain a record of the commencing and finishing times for each period of work, each day, of an employee in accordance with and contrary to an award.  Enforcement was pursuant to the then s83 of the Industrial Relations Act 1979 (WA) (as amended) (the Act). 

12      Sharkey P who published the reasons for decision of the Full Bench, at pages 2523 and 2524, set out the relevant criteria that should have been taken into account by the Industrial Magistrate.  Nine points were listed, none of which included the amount of any underpayments made.  Sharkey P said:-

“There was before us the question of whether it was relevant to consider actual underpayments.  In our opinion, in the absence of cogent argument to the contrary, the amount of a proven underpayment is not material to the breach of duty to maintain the time and wages record.  In many cases, any underpayment may not be easily established if a record is not kept in accordance with the provisions in the award.”

13      These observations therefore were specific to the complaints which were before the Industrial Magistrate about the non keeping of a time and wages record.  The decision does not stand for the proposition that the amount of the underpayment found to have occurred is not a material consideration in determining an appropriate penalty, in a case where there is a proved amount of underpayment contrary to an award. 

14      The amount of such an underpayment could vary markedly.  Therefore, in our opinion the amount of the underpayment is, amongst other things, a relevant consideration to take into account in assessing the appropriate penalty. 

15      As the primary reasons for decision of the Full Bench demonstrate, the Industrial Magistrate must have taken into account an amount of underpayment that was significantly higher than the amount which he ought to have taken into account, for the purposes of assessing the penalty to be imposed.  Therefore, unless there is any impediment to doing so, it would be appropriate for the Full Bench to consider and determine, as a consequential issue, the submission of the appellant that the penalty be reduced.  

16      The notice of appeal states that there is an appeal against the decision of the Industrial Magistrate “or the following parts of that decision namely”:-

“(a) that the Restaurant Tearoom and Catering Workers’ Award 1993 (“the Award”) applied to the employment of the Claimant (Respondent) with the Respondent (Appellant);

(b) that clause 25 of the Award applied to work performed by the Claimant in the employ of the Respondent;

(c) that the Claimant was entitled to a higher duties rate of pay for all work performed for the Respondent;

(d) that the respondent had breached the Award.”

17      The grounds set out in the schedule to the notice of appeal do not contend that the Industrial Magistrate erred in setting the penalty to be imposed on the basis that the underpayment was significantly less than that which the Industrial Magistrate had found.  The orders which the appellant sought were set out in the notice of appeal as being the following:-

“A. That judgement against the Appellant in the sum of $4571.18 plus interest of $309.75 be set aside.

B. That the penalty imposed in the in the (sic) sum of $750.00 be set aside.

C. That the order for costs against the Appellant be set aside.

D. That the claim be dismissed.”

18      This sought the setting aside of the penalty, in the context of the entire judgment sum ordered to be paid by the appellant to the respondent being set aside. 

19      The entitlement to appeal to the Full Bench from a decision of the Industrial Magistrate's Court is set out in s84 of the Act in the following terms:-

“84. Appeal to Full Bench from industrial magistrate’s court

(1) In this section “decision” includes a penalty, order, order of dismissal, and any other determination of an industrial magistrate’s court, but does not include a decision made by such a court in the exercise of the jurisdiction conferred on it by section 96J.

(2) Subject to this section, an appeal lies to the Full Bench in the manner prescribed from any decision of an industrial magistrate’s court.

(3) An appeal under this section shall be instituted within 21 days from the date of the decision against which the appeal is brought and may be instituted by any party to the proceedings wherein the decision was made.

(4) On the hearing of the appeal the Full Bench —

(a) may confirm, reverse, vary, amend, rescind, set aside, or quash the decision the subject of the appeal;

(b) may remit the matter to the industrial magistrate’s court or to another industrial magistrate’s court for further hearing and determination according to law; and

(c) subject to subsection (5), may make such order as to costs as the Full Bench considers appropriate.

(5) In proceedings under this section costs shall not be given to any party to the proceedings for the services of any legal practitioner, or agent of that party unless, in the opinion of the Full Bench, the proceedings have been frivolously or vexatiously instituted or defended, as the case requires, by the other party.”

20      The powers of the Full Bench upon hearing an appeal are set out in s84(4) of the Act.  They include powers broad enough to vary the penalty imposed by the Industrial Magistrate on the basis that the amount of an underpayment, contrary to an award, was less than that which was determined by the Industrial Magistrate.  In an appeal where the amount of the underpayment is in issue, it can be expected that the Full Bench will be asked, as a consequential order, to vary the penalty imposed if the appeal is successful.  The issue of the amount of the underpayment was squarely raised by the grounds of appeal, giving rise, in this appeal, to the expectation we have referred to. The appellant has now submitted that the amount of the penalty be reviewed by the Full Bench and reduced.  The respondent did not suggest that the Full Bench was in this case restricted in varying the penalty order because it was not expressly raised in the grounds of appeal. 

21      Given the powers of the Full Bench in hearing an appeal against a decision of the Industrial Magistrate’s Court, the contents of the notice of appeal, the basis on which the appeal was allowed, the expectation we have referred to and the position of the respondent, we do not think there is any impediment in this appeal to the Full Bench reviewing the amount of the penalty order.  Indeed, we believe that it ought to do so for the reasons expressed in paragraphs [14] and [15] above.

22      The amount of the underpayment is now established to be $2189.66 plus interest of $295.61, which totals $2485.27.  The amount of the underpayment and interest which were the subject of the orders made by the Industrial Magistrate totalled $4880.93.  Therefore there has been a reduction in these amounts of about 50% because of the appeal.  This is, in the context of the amount as a whole, a significant reduction.  There has been no reduction however in the number of times which the appellant breached the award.  The maximum penalty which can be imposed under s83(4) of the Act is $2000.00 in the case of an employer.  This is of course a relevant consideration in setting the amount of the penalty. 

23      We also take into account as submitted by the respondent that the underpayments occurred over a lengthy period and the issue of deterrence to this employer and to other employers who might be bound by this or other awards.  We also take into account that the appellant has not drawn to our attention any particular mitigating circumstances which applied. 

24      We do not think it is open to find that the appellant wanted to have the respondent sign an AWA because they wished to pay the respondent less than the amounts established by the award.  Additionally, the entitlement of an employer to offer an employee an AWA is permitted under the Workplace Relations Act 1996 (Cth).  This would not, therefore, in our opinion be an appropriate factor to take into account in assessing the penalty. 

25      In all of the circumstances in our opinion the appropriate penalty to be imposed is the amount of $500.00 which should be paid to the respondent. 

26      Accordingly, in our opinion the following orders should be made:-

1. The appeal is upheld.

2. The orders made by the Industrial Magistrate's Court on 31 August 2006 are set aside.

3. The appellant shall pay to the respondent the sum of $2189.66 plus interest thereon fixed at $295.61.

4. A penalty of $500.00 is imposed upon the appellant for its breach of the award which shall be paid to the respondent.

5. The appellant shall pay to the respondent the sum of $72.00 being the disbursements incurred by the respondent in the claim at first instance.

6. The payment of the amounts specified in 3 to 5 above shall be made by the appellant to the respondent within 14 days of the date of the publication of this order.

27      A minute of proposed orders will issue in these terms.