WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2018 WAIRC 00905

DELIVERED : Wednesday, 19 December 2018

FILE NO. : M 22 OF 2018

CLAIMANT

AND

New Accord Pty Ltd atft AMI Unit Trust t/a Global Maritime Data & Airtime Services

Respondent

CatchWords : INDUSTRIAL LAW – FAIR WORK – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth)

Legislation : Fair Work Act 2009 (Cth)
Industrial Relations Act 1979 (WA)
Crimes Act 1914 (Cth)
Magistrates Court (Civil Proceedings) Act 2004 (WA)

Case(s) referred to

in reasons : Smith v New Accord Pty Ltd atft Unit Trust t/as Global Maritime Data & Airtime Services [2018] WAIRC 834
Miller v Minister of Pensions [1947] 2 All ER 372
Briginshaw v Briginshaw [1938] HCA 34
Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No               2) [2017] FCA 557
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62
Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832
Milardovic v Vemco Services Pty Ltd (Administrators Appointed)               (No 2) [2016] FCA 244
Sayed v Construction, Forestry, Mining and Energy Union [2016]               FCAFC 4

Result : Pecuniary penalty to be paid

Representation:

Claimant : Mr W. Milward (of counsel)

Respondent : Mr A. Aristei as instructed Irwin Legal

SUPPLEMENTARY REASONS FOR DECISION

1         On 8 November 2018, the respondent was found to have contravened the Fair Work Act 2009 (Cth) (the Act) in that the respondent was found to have failed to pay the claimant an amount under the Act and in doing so, contravened a civil remedy provision in failing to pay the amount.

2         The respondent was ordered to pay:

• $1,389.80 for normal hours of pay;
• $4,070.08 for untaken paid annual leave;
• $576.92 for public holidays; and
• $3,605.77 for personal leave.

3         In summary, the respondent's contravention arose from a dispute concerning the status of a ‘return of service’ clause in a contract of employment between the claimant and the respondent. The ‘return of service’ clause was found not to comply with s 324(1)(a) of the Act and, as such, the respondent was not authorised to make deductions from the claimant’s final pay for training courses undertaken by the claimant.

4         The respondent erroneously relied upon a general authority clause in the contract of employment to deduct monies from the claimant's final pay for training courses where the claimant had not completed the requisite return of service specified in the contract.

5         In Smith v New Accord Pty Ltd atft Unit Trust t/as Global Maritime Data & Airtime Services [2018] WAIRC 834, the court provided its reasons for decision in respect of the contraventions.

6         These supplementary reasons are in relation to an application by the claimant for a pecuniary penalty pursuant to s 546(1) of the Act.

7         The parties each provided an outline of written submissions on the payment of a pecuniary penalty.

8         Schedule I of these supplementary reasons outline the jurisdiction, standard of proof and practice and procedure of the court in determining this case.

9         Schedule II of these supplementary reasons outline the provisions of the Act and principles relevant in determining an appropriate pecuniary penalty (if any) for the respondent's contraventions.

10      The effect of s 557(1) of the Act is that two or more contraventions of the Act are taken to constitute a single contravention if they are committed by the same person and arose out of a course of conduct by that person. I am satisfied that no relevant distinction can be made in the respondent's conduct with respect to the four contraventions. It follows from this finding of single course of conduct by the respondent that the failure to pay: the minimum wage for normal hours of pay; untaken paid annual leave; public holidays; and personal leave, will be treated as four single contraventions.

11      The following considerations are significant in assessing penalties in this case:

• the maximum penalty with respect to each contravention by the respondent is 60 penalty units which equates to $63,000 given the respondent is a body corporate;
• the respondent's reliance on the ‘return of service’ clause reflected an incorrectly held view (apparently by the respondent's lawyers) that a general authority clause permitted deductions where an employee did not complete the requisite service time for the training course undertaken at the respondent's cost;
• while the respondent's reliance on the ‘return of service’ clause was in contravention of the Act, the position may be different at common law. That is, the contract term may not be invalid under the common law governing contracts, indicative that the contraventions were not a flagrant or willful breach of the Act by the respondent;
• the claimant voluntarily entered in to the contract of employment and was satisfied with the terms of the contract of employment when he signed it, including the ‘return of service’ term;
• following the claimant tendering his notice of resignation, the respondent offered for the claimant to continue working in compliance of the ‘return of service’ clause, indicative of the respondent's preparedness to initially conciliate with the claimant;
• the claimant, as was his right, declined the respondent's offer as he wished to take a up new position, but around the same time accessed other personnel’s email accounts without permission and forwarded arguably sensitive documents to his personal email account, albeit this conduct was not discovered until later;
• the claimant received a benefit from the training courses he undertook, particularly where he included his attendance at the training courses on his curriculum vitae;
• little is known of the claimant's actual medical condition, but it appears to have existed throughout the course of his employment and the period of leave taken for allegedly stress related reasons also coincided with a period of cancelled annual leave after the claimant tendered his resignation and accessed other personnel’s email accounts;
• the respondent is a mid-sized company and one of the directors was obviously involved in the decision-making process;
• the respondent has not been found to have previously contravened the Act; and
• the primary purpose of a civil penalty is to promote the public interest in compliance with the law and not as an additional award of compensation for hurt feelings, inconvenience, the stress of litigation or legal fees.

12      In light of the above, considerations of punishment and specific deterrence are less important in this case than the need to deter employers from relying on general authority clauses to make deductions in contravention of the Act. The conduct in all the circumstances is properly categorised in the low range.

13      For these reasons penalties fixed in the sum of $500 on account of the failure to pay minimum normal hours of pay, $1,000 on account of the failure to pay untaken paid annual leave, $500 on account of the failure to pay public holidays and $1,000 on account of the failure to pay personal leave, being total penalties of $3,000 is a proportionate reflection of the gravity of the contravening conduct by the respondent.

14      The claimant seeks an order pursuant to s 546(3)(c) of the Act that the penalties be paid to him and, while the claimant’s conduct is a factor for consideration, an order is made that the respondent may the penalty of $3,000 to the claimant.

INDUSTRIAL MAGISTRATE

D. SCADDAN

Schedule I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court (WA) under the Fair Work Act 2009 (Cth)

Jurisdiction

1         An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the Act. The Industrial Magistrates Court (WA) (IMC), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: s 12 of the Act (see definitions of ‘eligible State or Territory court’ and ‘Magistrates Court’); Industrial Relations Act 1979 (WA), s 81, s 81B.

2         The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: s 544 of the Act.

3         The civil penalty provisions identified in s 539 of the Act include other terms and conditions of employment as set out in Part 2 – 9 of the Act. For example, s 323 of the Act sets out the obligation of an employer on the method and frequency of amounts payable to employees in relation to the performance of work.

4         An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: s 14, s 12 of the Act. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: s 13 of the Act. It is not in dispute and it was found that the respondent is a corporation to which paragraph 51(xx) of the Constitution applies and that the claimant was employed by the respondent.

5         Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for a person to pay a pecuniary penalty: s 546 of the Act.

Burden and Standard of Proof

6         In an application under the Act, the claimant carries the burden of proving the claim. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:

It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say 'we think it more probable than not' the burden is discharged, but if the probabilities are equal it is not.

7         In the context of an allegation of the breach of a civil penalty provision of the Act it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences [362].

8         Where in this decision it is stated that a finding has been made, the finding is made on the balance of probabilities. Where it is stated that a finding has not been made or cannot be made, then no finding can be made on the balance of probabilities.

Practice and Procedure of the Industrial Magistrates Court

9         The Industrial Relations Act 1979 (WA) provides that, except as prescribed by or under the Act, the powers, practice and procedure of the IMC is to be the same as if the proceedings were a case under the Magistrates Court (Civil Proceedings) Act 2004 (WA): s 81CA. Relevantly, regulations prescribed under the Industrial Relations Act 1979 (WA) provide for an exception: a court hearing a trial is not bound by the rules of evidence and may inform itself on any matter and in any manner as it thinks fit: reg 35(4).

10      In Sammut v AVM Holdings Pty Ltd [No2] [2012] WASC 27, Commissioner Sleight examined a similarly worded provision regulating the conduct of proceedings in the State Administrative Tribunal and made the following observation (omitting citations):

40 … The tribunal is not bound by the rules of evidence and may inform itself in such a manner as it thinks appropriate. This does not mean that the rules of evidence are to be ignored. The more flexible procedure provided for does not justify decisions made without a basis in evidence having probative force. The drawing of an inference without evidence is an error of law. Similarly, such error is shown when the tribunal bases its conclusion on its own view of a matter which requires evidence.

Schedule II: Pecuniary Penalty Orders and Accessorial liability under the Fair Work Act 2009 (Cth)

Pecuniary Penalty Orders

11      The Act provides that the court may order a person to pay an appropriate pecuniary penalty if the court is satisfied that the person has contravened a civil remedy provision: s 546(1). The maximum penalty for each contravention by a natural person, expressed as a number of penalty units, set out in a table found in s 539(2) of the Act: s 546(2) of the Act. If the contravener is a body corporate, the maximum penalty is five times the maximum number of penalty units proscribed for a natural person: s 546(2) of the Act.

12      The rate of a penalty unit is set by s 4AA of the Crimes Act 1914 (Cth): s 12 of the Act. The relevant rate is that applicable at the date of the contravening conduct:

13      The purpose served by penalties was described by Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 in the following terms (omitting citations):

In contrast to the criminal law, however, where, in sentencing, retribution and rehabilitation are also relevant, the primary, if not the only, purpose of a civil penalty is to promote the public interest in compliance with the law. This is achieved by imposing penalties that are sufficiently high to deter the wrongdoer from engaging in similar conduct in the future (specific deterrence) and to deter others who might be tempted to contravene (general deterrence). The penalty for each contravention or course of conduct is to be no more and no less than is necessary for that purpose [338].

14      In Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 [14], Tracey J adopted the following ‘non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty’ which had been set out by Mowbray FM in 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.

m)   The need for specific and general deterrence.

15      The list is not ‘a rigid catalogue of matters for attention. At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.’ (Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 [91]).

16      ‘Multiple contraventions’ may occur because the contravening conduct done by an employer:

a)      resulted in a contravention of a single civil penalty provision or resulted in the contravention of multiple civil penalty provisions;

b)     was done once only or was repeated; or

c)      was done with respect to a single employee or was done with respect to multiple employees.

17      The fixing of a pecuniary penalty for multiple contraventions is subject to s 557 of the Act. It provides that two or more contraventions of specified civil remedy provisions (including contraventions of an enterprise agreement and a contravention on s 323 of the Act on the payments) by an employer are taken be a single contravention if the contraventions arose out of a course of conduct by the employer. Subject to proof of a ‘course of conduct’, the section applies to contravening conduct that results in multiple contraventions of a single civil penalty provision whether by reason of the same conduct done on multiple occasions or conduct done once with respect to multiple employees: Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153; Fair Work Ombudsman v South Jin Pty Ltd (No 2) [2016] FCA 832 [22] (White J). The section does not to apply to case where the contravening conduct results in the contravention of multiple civil penalty provisions (example (a) above): Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 [411] ff (Katzmann J).

18      The totality of the penalty must be re-assessed in light of the totality of the offending behaviour. If the resulting penalty is disproportionately harsh, it may be necessary to reduce the penalty for individual contraventions: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; 246 ALR 35; [2008] FCAFC 8 [47] – [52].

19      Section 546(3) of the Act also provides:

Payment of penalty

(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:

(a) the Commonwealth; or

(b) a particular organisation; or

(c) a particular person.

20      In Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244 [40] – [44], Mortimer J summarised the law (omitting citations and quotations) on this provision in light of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4:

The power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. The initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the “Gibbs exception” (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553) that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.