FEDERAL COURT OF AUSTRALIA

Airservices Australia v Civil Air Operations Officers’ Association of Australia [2022] FCAFC 172

ORDERS

THE COURT ORDERS THAT:

1.    Save and except for order 2 below, the appeal be dismissed.

2.    Orders 1 and 2 made by the primary judge on 20 August 2021 be set aside, and in lieu thereof it be ordered that pursuant to s 546 of the Fair Work Act 2009 (Cth), the appellant pay:

(a)    a pecuniary penalty of $12,600 in relation to the Consultation Contravention; and

(b)    a pecuniary penalty of $12,600 in relation to the Status Quo Contravention,

as defined in the declarations made by the primary judge on 20 August 2021.

3.    Pursuant to s 546(3) of the Fair Work Act 2009 (Cth), the pecuniary penalties in order 2 be paid to the respondent within 28 days of this order.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BROMBERG J:

1    I have had the substantial advantage of reading in draft the reasons for judgment of O’Callaghan J. In my view, the proceeding before the primary judge was clearly within jurisdiction for the reasons given by his Honour. There is no merit in the contention of the appellant (Airservices Australia) that there was not a “matter” arising under the Fair Work Act 2009 (Cth) (FW Act), before the primary judge or that the primary judge erred by failing to find that the respondent was prevented from bringing the proceedings in this Court (grounds 1 and 2 of Airservices’ grounds of appeal). I also respectfully agree that the primary judge did not err in granting declaratory relief as contended under ground 3. Furthermore, for the reasons given by O’Callaghan J each of grounds 6, 7, 8, 9, 10 and 11 of Airservices’ grounds of appeal should be dismissed.

2    That leaves grounds of appeal 4, 5 and 12 by which Airservices contended that the penalties imposed by the primary judge were manifestly excessive. The primary judge ordered that Airservices pay a pecuniary penalty of $40,950 in relation to its failure to comply with cl 8 of the Airservices Australia (Air Traffic Control and Supporting Air Traffic Services) Enterprise Agreement 2017-2020 (EA) and, thereby, its contravention of s 50 of the FW Act. That contravention concerned the failure of Airservices to consult with some 18 employees prior to implementing changes to their work arrangements and in particular by the withdrawal of a set of guidelines (Guidelines) which regulated the use of stand-by rosters in the rostering of air traffic controllers for duty.

3    The primary judge imposed a second penalty on Airservices of $31,500 in relation to Airservices’ failure to comply with cl 10.1(g) of the EA and, thereby, its contravention of s 50 of the FW Act. By that contravention Airservices failed to comply with an aspect of the dispute resolution process provided by the EA, namely, the maintenance of the status quo. In this case, that required the maintenance of the Guidelines whilst the dispute about the removal of the Guidelines was resolved by the Fair Work Commission in accordance with the dispute resolution process in the EA.

4    For the reasons which follow, I respectfully disagree with the conclusion of O’Callaghan J and the concurring judgment of Snaden J, that the penalties imposed by the primary judge were manifestly excessive and should therefore be set aside. In my view, the appeal should be dismissed in its entirety.

WERE THE PENALTIES IMPOSED MANIFESTLY EXCESSIVE?

5    A manifest error in sentencing arises because the sentence imposed is out of the range of sentences that could have been imposed: Hili v R (2010) 242 CLR 520 at [60] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

6    The principles for identifying manifest error were recently discussed in Australian Building and Construction Commissioner v Australian Workers’ Union [2022] FCAFC 143 (ABCC v AWU). At [74] Moshinsky and O’Callaghan JJ endorsed the following observation made by Greenwood, Middleton and Foster JJ at [53] of Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172:

To the extent ASIC says the penalty was ‘manifestly inadequate’, the inadequacy must be ‘obvious, plain, apparent, easily perceived or understood and unmistakeable. It must be so far outside the range of reasonable discretionary judgement as to itself bespeak error’: Hanks v The Queen [2011] VSCA 7 at [22]; Zerafa v The Queen [2013] VSCA 42 at [41]. Mere disagreement, or a difference of opinion, between an appellate court and a primary judge over the penalty imposed is not sufficient.

7    At [76] Moshinsky and O’Callaghan JJ elaborated upon those observations saying:

We note that reasonable minds will often differ as to the appropriate pecuniary penalty for the contravention of a civil penalty provision. Given this, a ground of appeal contending that a penalty imposed by a judge is manifestly inadequate (or manifestly excessive) may be difficult to establish in circumstances where the judge has had regard to all relevant considerations and not had regard to any extraneous considerations.

8    Airservices did not contend that the primary judge failed to take into account considerations that were capable of mitigating the necessity to impose the penalties which were imposed. As the reasons of O’Callaghan J observe at [117] the primary judge found that:

(1)    the failure to consult was limited to 18 employees;

(2)    the window for any consultation was short;

(3)    there was no evidence that any air traffic controller was adversely affected by the withdrawal of the Guidelines;

(4)    it was not established that the withdrawal of Guidelines resulted in a material increase in the relevant employees being called into work; and

(5)    Airservices’ conduct was not covert and its breaches were not surreptitious.

9    Airservices did contend that the primary judge had regard to considerations that he should not have had regard to. Namely, that the primary judge took into account that:

(1)    Airservices had ‘taken the odds’ in failing to consult (see ground 8);

(2)    there was an absence of an apology (see ground 9);

(3)    there was a need to ensure that Airservices did not regard any penalty imposed as the ‘cost of doing business’ (see ground 10); and

(4)    Airservices “continues to show insufficient appreciation of the seriousness of the failure to consult” (see ground 11).

10    Each one of those considerations that Airservices contended were extraneous has been rejected on this appeal. Accordingly, Airservices has failed to point to any matter which the primary judge should have taken into account and did not or any matter that his Honour erred in taking into account.

11    As Moshinsky and O’Callaghan JJ said in ABCC v AWU at [76], given that reasonable minds will differ as to an appropriate pecuniary penalty, an assertion of manifest error will be difficult to establish where the primary judge has not erred in relation to the considerations that the primary judge had regard to. That is so because in that circumstance, an appellant’s complaint with the penalty imposed is no more than a complaint about the weight which was given by the primary judge to the various considerations that the judge correctly took into account. The weight to be accorded to and the balance to be struck between competing considerations is quintessentially a matter for the primary judge. An appellate court should leave such an assessment undisturbed unless positively satisfied that there is an inadequacy or an excess in the penalty imposed which is “obvious, plain, apparent, easily perceived or understood and unmistakeable”: Wooldridge at [53]. The penalty imposed must not simply be outside the range of penalties that the appellate court considers to be apt, it must be “so far outside the range of reasonable discretionary judgement as to itself bespeak error”: Wooldridge at [53].

12    I would accept that the mitigating considerations relied upon by Airservices are not insignificant (although I have some doubt as to the significance of the “duration of the consultation contravention” being short). However, those considerations were not treated as insignificant by the primary judge. Unlike the approach taken by Airservices on the appeal, the primary judge balanced those considerations with competing considerations which his Honour correctly determined to be significant to the assessment of the level of deterrence required by reference to the seriousness of the contraventions in question, the attitude displayed by Airservices in relation to its contravening conduct, the prior contravening conduct of Airservices and its capacity to meet any penalty imposed.

13    As the primary judge correctly determined, the consequence of Airservices’ failure to consult was the loss of a valuable opportunity that the EA required be provided to affected employees to persuade Airservices to take into account the possible detrimental consequences for them of changed rostering arrangements (at [140]) . The primary judge regarded that failure “involved a serious breach of the EA” (at [88]). In essence, the entire benefit of the entitlement provided by the EA in relation to consultation for the proposed change was denied to the employees by Airservices’ contravention.

14    Airservices’ “continued failure to recognise” that consultation was a “valuable right in and of itself” indicated, as the primary judge reasoned at [140], a “need to impose a penalty sufficient to deter it from a repetition of similar conduct”. At [156] the primary judge again emphasised his concern that “Airservices continues to show insufficient appreciation of the seriousness of its failure to consult”. Those observations were made in the context of the primary judge’s finding that the failure to consult was “deliberate, unilateral and made at a management level” (at [154]) and, tellingly, that the contravention was preceded by a prior consultation contravention which was the subject of a proceeding on foot at the time of the instant contravention (see at [127]).

15    Airservices’ refusal to reinstate the Guidelines for some ten months so as to maintain the status quo required to facilitate the dispute resolution process was, unsurprisingly, regarded by the primary judge as involving “a serious breach” (see at [159]-[160]). That refusal was “a conscious decision of senior management” (at [159]). That conduct unilaterally denied the entirety of an entitlement which had the obvious capacity to substantially undermine the dispute resolution process provided for by the EA. Furthermore, in relation to both contraventions, the primary judge took into account that Airservices is a large and well-resourced statutory corporation and that the penalty imposed needed to be sufficient to ensure that it did not see its contravening conduct as merely a cost of doing business (at [156]).

16    The primary judge imposed mid-range penalties for contraventions his Honour, unsurprisingly, regarded as serious in circumstances where prior similar offending had occurred and where the offender continued to display a failure to appreciate the seriousness of its contravening conduct. Whilst reasonable minds may differ as to where, within that mid-range, the appropriate penalties should have been struck, in light of the well-settled principles which must be applied, there is no warrant for an appellate court to disturb the penalties imposed by the primary judge.

Associate:

Dated:    19 October 2022

REASONS FOR JUDGMENT

O’CALLAGHAN J:

INTRODUCTION

17    The appellant, Airservices Australia (Airservices or the appellant), is an Australian Government statutory authority. It employs, among other employees, civilian air traffic controllers, referred to as “ATCs”.

18    The respondent, Civil Air Operations Officers’ Association of Australia (Civil Air or the respondent), is a registered industrial association under the Fair Work (Registered Organisations) Act 2009 (Cth). It represents the industrial interests of ATCs.

19    In 2017, the parties entered into an enterprise agreement under the Fair Work Act 2009 (Cth) (FW Act) called the Airservices Australia (Air Traffic Control and Supporting Air Traffic Services) Enterprise Agreement 2017–2020 (the EA).

20    In mid-2018, a dispute arose between the appellant and the respondent as to matters arising under the EA, following the decision by the appellant to withdraw from use a set of guidelines, contemplated by cl 19.18 of the EA, which regulate the use of stand-by or so-called “grey day” rosters in the rostering of ATCs for duty (the Grey Day Guidelines or the Guidelines).

21    Grey day rosters allowed the appellant to roster employees to be on stand-by for a specific grey day (or “nominal”) shift, for relief in the event that an employee who was rostered on duty was unavailable to work. Such employees were not required to attend for work unless they were called to do so, but they were required to keep themselves available to be called in to perform duty for a period representing twice the length of the nominal shift. When so rostered, the employee was paid their ordinary rate of pay in respect of the nominal shift, whether or not they were required to attend for duty.

22    The respondent informed the appellant of the dispute in early July 2018, and on 13 July 2018, it notified the dispute to the Fair Work Commission (FWC), seeking conciliation.

23    Relevantly, the respondent claimed that the appellant failed to:

(a)    consult with ATCs before it withdrew the Grey Day Guidelines from use, in breach of cl 8 of the EA; and

(b)    maintain the status quo by not reinstating the Grey Day Guidelines after being notified of a dispute in relation to their withdrawal, in breach of cl 10.1(g) of the EA.

24    The parties were unable to resolve the dispute by conciliation. The respondent then asked the FWC to arbitrate the dispute pursuant to the “Disputes Avoidance and Settlement Process” provision contained in cl 10.1(e) of the EA.

25    Commissioner Wilson heard the dispute on 4 and 5 February 2019 (more than six months after the notification of the dispute) and published his reasons on 11 April 2019. See The Civil Air Operations Officers’ Association of Australia v Airservices Australia T/A Airservices Australia [2019] FWC 2136. Relevantly, he found that the appellant failed to:

(a)    consult with ATCs in the “Brisbane-based Byron Group” before withdrawing the Grey Day Guidelines from use, in breach of cl 8 (but was not obliged to consult in respect of ATCs in the so-called “Brisbane Tower Group”); and

(b)    maintain the status quo by not reinstating the use of the Guidelines in the Byron Group after being notified by the respondent of a dispute, in breach of cl 10.1(g) (but was not obliged to reinstate the Guidelines in respect of the Brisbane Tower Group).

26    Neither party appealed the decision to the Full Bench.

27    On 8 June 2019, the respondent commenced a proceeding in this court by way of originating application and statement of claim seeking, relevantly:

(a)    declarations pursuant to s 545 of the FW Act and/or s 21 of the Federal Court of Australia Act 1976 (Cth) that:

(i)    by failing to consult with its ATC employees in the Byron Group prior to withdrawing the Grey Day Guidelines from use the appellant breached cl 8 of the EA and thereby contravened s 50 of the FW Act; and

(ii)    by failing to maintain the status quo by not reinstating the Grey Day Guidelines in relation to the Byron Group, after being notified by the respondent of a dispute in relation to the withdrawal of the Guidelines, the appellant breached cl 10.1(g) of the EA and thereby contravened s 50 of the FW Act; and

(b)    an order pursuant to s 546 of the FW Act that the appellant pay pecuniary penalties for its contraventions of the FW Act.

28    The appellant applied to set aside the proceeding on the ground that, by reason of Commissioner Wilson’s decision, there was no subsisting justiciable controversy between the parties and thus no “matter arising under” the FW Act within the meaning of s 562 of that Act. It followed, so the appellant contended, that the court lacked jurisdiction to hear and decide the proceeding.

29    The primary judge held that the court did have jurisdiction to hear and decide the proceeding, and dismissed the appellant’s application. It did not appeal immediately from that order, but reserved its right to do so pending the determination of whether declaratory relief would be granted and penalties ordered. See Civil Air Operations Officers Association of Australia v Airservices Australia [2020] FCA 1665 (the jurisdiction judgment or JJ).

30    The primary judge then heard the respondent’s application for declaratory relief and penalties.

31    Subject to its contention that despite the judge’s ruling, the court lacked jurisdiction, the appellant admitted in its defence that it had contravened s 50 of the FW Act as pleaded, but it resisted the making of declarations in respect of the contraventions and any orders for pecuniary penalties.

32    The primary judge held that the appellant had contravened s 50 of the FW Act; made declarations of contravention; and ordered that it pay (to the respondent) pecuniary penalties totalling $72,450. See Civil Air Operations Officers Association of Australia v Airservices Australia (No 2) [2021] FCA 993 (the penalties judgment or PJ).

33    The appellant appealed, contending that the primary judge erred in the jurisdiction judgment by (i) deciding that, despite the private arbitration by Commissioner Wilson, there was a subsisting justiciable controversy and a “matter” arising under the FW Act, such as to give the court jurisdiction under s 562 of the FW Act, and (ii) failing to find that the respondent (having elected to have the dispute determined by the FWC) was prevented from bringing the proceedings in this court (grounds 1 and 2).

34    In the alternative, the appellant contended that if the court did have such jurisdiction, the primary judge erred in the exercise of discretion by making the declarations (ground 3), and by imposing the penalties, in the amounts imposed or at all (grounds 4-12).

35    For the reasons that follow, in my view grounds 1, 2 and 3 should be dismissed. In my view, however, the penalties imposed by the primary judge in respect of the contraventions were manifestly excessive and grounds 4, 5 and 12 should be allowed. The remaining grounds should otherwise be dismissed.

THE JURISDICTION OF THE FWC – STATUTORY PROVISIONS

36    Part 2-4 of the FW Act provides for the making of enterprise agreements. Sub-section 185(1) requires that if an enterprise agreement is made, a bargaining representative must apply to the FWC for approval of the agreement.

37    Sub-section 186(1) provides that the FWC must approve an enterprise agreement if the requirements set out in ss 186 and 187 are met.

38    Section 186(6)(a)(i) provides that before approving an enterprise agreement, the FWC must be satisfied that an enterprise agreement includes “a term that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes … about any matters arising under the agreement”.

39    The FW Act limits the circumstances in which the FWC may exercise arbitral powers. Section 595 of the FW Act provides:

595    FWC’s power to deal with disputes

(1)    The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2)    The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a)    by mediation or conciliation;

(b)    by making a recommendation or expressing an opinion.

(3)    The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(4)    In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

(5)    To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.

40    The express authorisation of the FWC to deal with a dispute by way of arbitration is contained in s 739(4) of the FW Act, which provides that “[i]f, in accordance with [a term of an enterprise agreement] the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so”. Sub-section 739(6) provides that “[t]he FWC may deal with a dispute only on application by a party to the dispute” (emphasis added).

41    The FWC does not have the power to make orders in relation to contraventions of civil remedy provisions of the FW Act. Applications in respect of such contraventions must be made to this court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State and Territory court. See ss 539 and 540 of the FW Act.

THE RELEVANT CIVIL PENALTY PROVISIONS OF THE FW ACT

42    Section 50 of the FW Act provides that “[a] person must not contravene a term of an enterprise agreement”.

43    Section 545 of the FW Act provides:

545    Orders that can be made by particular courts

Federal Court and Federal Circuit and Family Court of Australia (Division 2)

(1)    The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Note 1:    For the court’s power to make pecuniary penalty orders, see section 546.

Note 2:    For limitations on orders in relation to costs, see section 570.

Note 3:    The Federal Court and the Federal Circuit and Family Court of Australia (Division 2) may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).

Note 4:    There are limitations on orders that can be made in relation to contraventions of subsection 65(5), 76(4), 463(1) or 463(2) (which deal with reasonable business grounds and protected action ballot orders) (see subsections 44(2), 463(3) and 745(2)).

(2)    Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following:

(a)    an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

(b)    an order awarding compensation for loss that a person has suffered because of the contravention;

(c)    an order for reinstatement of a person.

Eligible State or Territory courts

(3)    An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:

(a)    the employer was required to pay the amount under this Act or a fair work instrument; and

(b)    the employer has contravened a civil remedy provision by failing to pay the amount.

Note 1:    For the court’s power to make pecuniary penalty orders, see section 546.

Note 2:    For limitations on orders in relation to costs, see section 570.

(3A)    An eligible State or Territory court may order an outworker entity to pay an amount to, or on behalf of, an outworker if the court is satisfied that:

(a)    the outworker entity was required to pay the amount under a modern award; and

(b)    the outworker entity has contravened a civil remedy provision by failing to pay the amount.

Note 1:    For the court’s power to make pecuniary penalty orders, see section 546.

Note 2:    For limitations on orders in relation to costs, see section 570.

When orders may be made

(4)    A court may make an order under this section:

(a)    on its own initiative, during proceedings before the court; or

(b)    on application.

Time limit for orders in relation to underpayments

(5)    A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.

44    Section 546 of the FW Act provides:

546    Pecuniary penalty orders

(1)    The Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

Note:    Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).

Determining amount of pecuniary penalty

(2)    The pecuniary penalty must not be more than:

(a)    if the person is an individual—the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or

(b)    if the person is a body corporate—5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).

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.

Recovery of penalty

(4)    The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.

No limitation on orders

(5)    To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.

45    Section 562 of the FW Act is headed “Conferring jurisdiction on the Federal Court”. It provides: “Jurisdiction is conferred on the Federal Court in relation to any matter (whether civil or criminal) arising under this Act”.

THE RELEVANT TERMS OF THE ENTERPRISE AGREEMENT

46    The EA, which covers the appellant, its employees and the respondent, was approved by the FWC on 23 March 2017. It came into effect on 30 March 2017.

47    Clauses 7 and 8 relevantly provided:

7.    AIRSERVICES POLICIES AND PROCEDURES

7.1.    Airservices’ policies and procedures pertaining to employment matters do not form part of this Agreement. To the extent that there is any inconsistency between any such policy and/or procedure, the terms of this Agreement prevail.

7.2.    Airservices will consult with employees and employee representative(s) in the development and variation of such policies and will not unilaterally change them without such consultation.

8.    CONSULTATION ON CHANGE

8.1.    The intent of this consultation provision is to ensure employees and any employee representatives are fully informed, consulted and provided with a genuine opportunity to express their views and provide comments and/or suggestions prior to any final decision being made about changes that are likely to have a significant impact on employees covered by this Agreement and/or changes to an employee’s regular roster or ordinary hours of work. Airservices will give genuine consideration and respond to matters raised and proposals and options put forward.

…

8.3.    Airservices will consult employees and their employee representatives about:

(a)    the introduction of changes that are likely to have a significant impact on employees covered by this Agreement before a final decision is made to adopt a proposal and implement any change; and/or

(b)    changes to an employee’s regular roster or ordinary hours of work.

…

Consultation on changes to an employee’s regular roster or ordinary hours of work

8.10.    For a change of the kind referred to in clause 8.3(b) Airservices will consult with affected employees and their representatives by:

(a)    providing information about the change;

(b)    inviting the employee to give their views about the impact of the change (including any impact in relation to their family and caring responsibilities);

(c)    giving prompt and genuine consideration to matters raised about the change.

48    Clause 10 of the EA was headed “Disputes Avoidance and Settlement Process”. It was in these terms:

10.    DISPUTES AVOIDANCE AND SETTLEMENT PROCESS

10.1.    In the event of a dispute about a matter arising under this Agreement or in relation to the National Employment Standards between Airservices and an employee or employees whose employment is subject to this Agreement, the procedure to be followed to resolve the matter will be as follows:

(a)    The parties to the dispute first shall genuinely attempt to resolve the dispute at the workplace level. This will involve the relevant employee or employees meeting and conferring about the matter with their manager. All relevant information regarding the matter will be exchanged before, during, or on conclusion of such meeting/s.

(b)    If the matter is not resolved at such meeting/s, or the nature of the matter is such that it is appropriate to raise it immediately with more senior levels of management, then discussions will occur between the employee (or employees) and senior management as soon as practicable.

(c)    At any time during this process, an employee (or employees) who are party to the dispute may choose to be represented by an employee representative.

(d)    If the matter cannot be resolved by following the process outlined above, then any of the parties to the dispute may apply to the FWC to have the dispute subject to a process of conciliation, or such other alternative dispute resolution process which the parties agree is appropriate and which the FWC can conduct under the [FW] Act.

(e)    If conciliation (or such other alternative dispute resolution process as has been conducted by agreement of the parties) is not successful in resolving the dispute, or if the parties agree that they wish the FWC to settle the dispute without recourse to conciliation or another alternative dispute resolution process, the FWC can arbitrate the dispute and make a determination that is binding on the parties, subject to either party exercising a right of appeal against the decision to a Full Bench of the FWC.

(f)    Unless otherwise agreed by the parties to the dispute, the powers that the FWC can exercise under this clause 10.1 are those powers available to it under the [FW] Act as at the time that this Agreement commences to operate.

(g)    While a concern or dispute is being dealt with, work will continue as normal being the status quo save for any bona fide safety concerns.

(h)    The employer and employees will continue as usual in respect of work arrangements and work performed.

49    Clause 19.18 of the EA provided as follows:

19.18.    Stand-by rosters (‘Grey Days’)

(a)    Where Airservices considers it appropriate to do so, rosters may be drawn so as to include provision for employees to be rostered on stand-by shifts. These ‘grey day’ stand-by shifts will be shifts on which employees will be rostered on stand-by for relief in the event of absence of an employee who is rostered on duty.

(b)    When rostered on stand-by, an employee will be rostered for a specific shift on a specific day. This rostered stand by shift will be called the “nominal shift”. Such shift will not commence before 0600 local time and will not be of more than of eight (8) hours duration.

(c)    When on stand-by an employee will not attend for the nominal shift unless called in. However, the employee must be available to be called in to perform duty for a period representing twice the length of the nominal shift and the employee shall be “on call”, for a period of nine (9) hours or such other period as agreed provided that the employee will be:

(i)    stood-down one (1) hour after the commencement of the last shift in the stand-by period.

(ii)    available to report for duty at the nominated start time or in any event not later than two (2) hours after notification.

(d)    When rostered on stand-by an employee will be paid at their ordinary rate of pay for a shift in respect of the nominal shift whether or not they are required to attend for duty.

(e)    Provisions of these principles relating to shift commencement, cessation and extension and time off apply to the time actually worked.

50    As the primary judge explained (JJ at [11]), the EA permitted an ATC who was unavailable to work for an unforeseen reason, but otherwise scheduled to work, to be replaced by another person. To cover against the eventuality of an employee becoming unavailable to work, the EA provided that a replacement employee may be held away from work for up to the equivalent of double the relevant shift provided they were ready and fit for duty, in order to step in at short notice to cover a single shift if required. To achieve this, the standby employee was assigned to a nominal roster called a “Grey Day” roster but was not required to attend for work unless called to do so, and was paid whether or not they were called to work. The parties agreed that cl 19.18 of the EA provided for replacement by someone on the same roster, but disagreed as to whether a standby employee on some other roster could be brought in to replace the absent employee. See FWC decision at [6]-[7].

THE PROCEEDINGS IN THE FWC

51    On 13 July 2018, the respondent notified the FWC of a dispute pursuant to cl 10.1(d) of the EA (Dispute Notification). The Dispute Notification said, among other things, that:

(a)    in January 2017, the appellant and a delegate of the respondent had consulted and agreed the Grey Day Guidelines for the Byron Group in Brisbane;

(b)    the Grey Day Guidelines were subsequently applied to other groups in Brisbane;

(c)    on 13 May 2018, the appellant unilaterally decided to withdraw the Grey Day Guidelines;

(d)    the withdrawal decision was a decision which required consultation in accordance with cl 8 of the EA;

(e)    on 27 June 2018, a delegate of the respondent in Brisbane met with a senior service manager of the appellant and it was agreed that the Grey Day Guidelines would be reinstated until a consultation process was undertaken;

(f)    on 2 July 2018, the appellant refused to reinstate the Grey Day Guidelines;

(g)    on 5 July 2018, the respondent wrote to the appellant and advised that the respondent and the appellant were in dispute, and therefore the status quo provision in cl 10.1(g) of the EA applied;

(h)    on 11 July 2018, the appellant responded and said that the prior FWC decision in relation to the predecessor to cl 19.8 of the EA represented the status quo and rostering practices would continue in accordance with that decision and the EA;

(i)    the respondent and the appellant “remain in dispute about the status quo”; and

(j)    it was the respondent’s position “that the Guidelines represent the status quo regarding the [s]tand by shifts as these were in existence before the dispute, ergo, were the ‘previous position of affairs’”.

52    On 2 August 2018, Commissioner Wilson conducted, unsuccessfully, a conciliation conference.

53    On 9 October 2018, in accordance with a request made by Commissioner Wilson on 2 August 2018, the respondent provided to the appellant a document titled “Concise Summary of the Dispute to be Arbitrated” which set out eight questions for determination. Both parties later filed and served submissions and witness statements.

54    The arbitration hearing took place before Commissioner Wilson in the FWC on 4 and 5 February 2019.

55    On 11 April 2019, Commissioner Wilson handed down his decision. The decision dealt with the dispute by reference to the questions for determination proffered by the respondent in its concise statement as set out below.

56    Although only two of his findings are directly relevant for the purposes of this appeal, it is instructive to set out each of the questions determined (the answers appear elsewhere in the reasons, but are inserted here):

A.    Consultation

A1.    Ceasing to apply the Grey Day Guidelines

1.    Whether [Airservices] was required to comply with clause 7.2 and/or clauses 8.3(b) and 8.10 of the [EA] before ceasing to apply the Grey Day Guidelines at:

(a)    the Byron Group; and

(b)    the BNE [that is, Brisbane] Tower.

Answer: YES;

(a)    in respect of clauses 8.3(b) and 8.10 (but not clause 7.2) and

(b)    in relation to the Byron Group (but not the BNE Tower).

2.    If the answer to question 1 above is “yes”, whether [Airservices] failed to comply with clauses 7.2 and/or 8.3(b) and 8.10 (as the case may be) of the [EA] by:

(a)    failing to provide information about the change to the affected employees and their representatives; and/or

(b)    failing to invite the employees to give their views about the impact of the change (including) any impact in relation to their family and caring responsibilities); and/or

(c)    failing to give prompt and genuine consideration to matters raised about the change

before ceasing to apply the Grey Day Guidelines at:

(d)    the Byron Group; and

(e)    the BNE Tower.

Answer: YES;

(a)    in respect of clauses 8.3(b) and 8.10 (but not clause 7.2) and

(b)    in relation to the Byron Group (but not the BNE Tower).

A2.    Introduction of Grey Days without consultation

3.    Whether [Airservices] is required to comply with clause 7.2 and/or clauses 8.3(b) and 8.10 of the [EA] before introducing Grey Days in any particular location.

    Answer: YES in respect of clauses 8.3(b) and 8.10 (but not clause 7.2).

4.    If the answer to question 3 is “yes”, whether [Airservices] failed to comply with clause 7.2 and/or clauses 8.3(b) and 8.10 of the [EA] by introducing Grey Days without:

(a)    providing information about the change; and/or

(b)    inviting the employee to give their views about the impact of the change (including any impact in relation to their family and caring responsibilities); and/or

(c)    giving prompt and genuine consideration to matters raised about the change.

Answer: YES in respect of clauses 8.3(b) and 8.10 (but not clause 7.2).

B.    Status quo

5.    Whether [Civil Air] notified [Airservices] of a dispute within the meaning of clause 10 of the [EA] (the Dispute) in relation to [Airservices] ceasing to apply the Grey Day Guidelines at:

(a)    the Byron Group; and

(b)    the BNE Tower.

Answer: YES; in relation to the Byron Group (but not the BNE Tower).

6.    If the question to question 5 above is “yes”, whether [Airservices] was required to comply with clause 10.1 (g) of the [EA] in relation to the Dispute.

    Answer: YES; in relation to the Byron Group (but not the BNE Tower).

7.    If the question to question 6 above is “yes”, whether [Airservices] failed to comply with clause 10.1 (g) of the [EA] by, after being notified of the Dispute:

(a)    refusing to apply the Grey Day Guidelines at the Byron Group; and/or

(b)    refusing to apply the Grey Day Guidelines at the BNE Tower.

Answer: YES; in relation to the Byron Group (but not the BNE Tower).

C.    Construction of the agreement

8.    Whether, on its proper construction, clause 19.18:

(a)    permits [Airservices] to utilise an employee rostered on standby to fill only the direct vacancy in the roster caused by the absence of an employee rostered to work;

Answer: No.

or

(b)    permits [Airservices] to utilise an employee rostered on standby to fill both:

(i)    the direct vacancy in the roster caused by the absence of an employee rostered to work; or

(ii)    subsequent or consequential vacancies in the roster.

        Answer: Yes

57    The two findings that are directly relevant to this appeal are that:

(a)    the appellant withdrew from use the Grey Day Guidelines which applied to the Byron Group of ATCs; the withdrawal of the Guidelines constituted a change within the meaning of cll 8.3(b) and 8.10 of the EA; and the appellant failed to consult as required by cll 8.3(b) and 8.10 (the Consultation Contravention); and

(b)    the respondent notified the appellant of a dispute within the meaning of cl 10 of the EA about the withdrawal of the Guidelines; on 5 July 2018 the respondent requested maintenance of the status quo in accordance with cl 10.1(g) of the EA, namely the reinstatement of the Guidelines; and the appellant did not reinstate the Guidelines and consequently it breached cl 10.1(g) of the EA (the Status Quo Contravention).

THE REASONS OF THE PRIMARY JUDGE

Jurisdiction

58    The reasons of the primary judge in relation to the question whether in the proceeding before him there was a “matter arising under” the FW Act within the meaning of s 562 of that Act are lengthy, but in so far as those reasons are relevant on appeal, they may be summarised as follows:

(1)    In determining the dispute by private arbitration pursuant to cl 10.1 of the EA, the FWC was not exercising public power. It was acting as a private arbitrator (citing, among other cases, Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645) (JJ at [39]).

(2)    If, before the institution of an action, an award is made, it governs the rights of the parties and precludes them from asserting in the courts the claims which the award determined, because by submitting the claims to arbitration, the parties confer upon the arbitrator an authority conclusively to determine them (citing, among other cases, TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533) (JJ at [41], [63]).

(3)    The arbitrator’s making of an award extinguishes the original cause of action and imposes new obligations on the parties in substitution for the rights and liabilities which were the subject of the dispute referred to arbitration. The former rights of the parties are discharged by an accord and satisfaction (citing TCL Air Conditioner) (JJ at [63]).

(4)    The FWC had no power to make declarations of contravention of s 50 of the FW Act in relation to any failures to comply with any terms of the EA which it found, nor any power to order the imposition of a pecuniary penalty (JJ at [65]).

(5)    The FWC could only determine that part of the justiciable controversy between the parties that went to arbitration, and not any part or parts which did not. By the making of the FWC decision, the parties’ rights and liabilities in relation to the causes of action or claims “awarded upon” were extinguished and replaced by the arbitral award, but any other rights or liabilities beyond those were not extinguished. Thus, there remains a “matter” and the court has jurisdiction (JJ at [68]).

(6)    To determine what comprises the justiciable controversy or “matter” in the present case, it is necessary to consider what justiciable controversies exist between the parties which might come before a court. The immediate rights and liabilities to be established by a court are the respondent’s claim for, and the appellant’s liability for, declarations of contravention of s 50 of the FW Act and the imposition of pecuniary penalties. Those claims could not be brought before the FWC and could only be brought before a court of competent jurisdiction. The error in the appellant’s argument is that it seeks to bundle up the parties’ rights and liabilities in relation to the entirety of the claims the respondent might make and say that they were all determined by the FWC decision, and thereby extinguished, when some parts of the justiciable controversy could not be and were not determined by the FWC (JJ at [71]).

(7)    While the claims in the originating application are based in the same substratum of facts as the questions for determination arbitrated by the FWC (see [56] above), the originating application does not seek that the court decide precisely the same issues. The central questions raised by the originating application are:

(a)    whether it is appropriate to make declarations pursuant to s 21 of the Federal Court Act and/or s 545 of the FW Act that the appellant, by contravening cll 7.2, 8.3, 8.10 and 10.1(g) of the EA, has contravened s 50 of the FW Act; and/or

(b)    whether it is appropriate to order pursuant to ss 546(1) and (3) of the FW Act that the appellant pay pecuniary penalties for those contraventions, and if so, in what quantum and whether they should be paid to the respondent.

Those issues are related to but different to the issues decided by arbitration in which, relevantly, the FWC determined whether in the circumstances of the case the appellant had an obligation to comply with cll 7.2, 8.3, 8.10 and 10.1(g) and whether it failed to do so (JJ at [78]).

(8)    While the court will not be required to re-decide whether the appellant in fact complied with the relevant clauses, before declarations of contravention could be made the respondent must satisfy the court as to any remaining elements of the alleged contraventions and show that it is appropriate in the circumstances to make the declarations. Then, if the court finds that there has been a contravention of s 50, the respondent must satisfy the court that in the circumstances it is appropriate to impose a pecuniary penalty (JJ at [80]).

59    Further, the primary judge did not:

… accept Airservices’ submission that having regard to the scheme of the [FW Act] it [was] not open for Civil Air to:

(a)     notify a dispute to the FWC regarding whether Airservices was obliged to and had failed to comply with certain clauses of the EA;

(b)    obtain a decision from the FWC by arbitration that in the circumstances Airservices was obliged to comply with some of the clauses but not others, and had failed to comply with those clauses;

and then subsequently;

(c)    make an application to the Court for declarations of contravention of s 50 of the [FW Act] in relation to the failures to comply found by the FWC and for the imposition of pecuniary penalties, in reliance on the findings in the FWC [d]ecision.

See JJ at [102].

Whether the alleged contraventions were made out

60    There was no controversy on appeal about whether the alleged contraventions were made out, because, subject to the jurisdiction argument, the appellant admitted that: it breached cl 8 of the EA and that by its breach of cl 8 it had thereby contravened s 50 of the FW Act; and that it breached cl 10.1(g) of the EA and that by its breach of cl 10.1(g) it thereby contravened s 50 of the FW Act.

61    As the primary judge noted (PJ at [24]), “[i]t is likely [the appellant] made those admissions as it was estopped from denying the breaches of the EA”.

Declarations of contravention

62    Before the primary judge, the respondent sought the following declarations:

1    By failing to consult with its Air Traffic Controller employees in the Byron Group prior to withdrawing from use a set of guidelines regulating the use of grey days in the Byron Group roster, Airservices failed to comply with cl 8 of the Airservices Australia (Air Traffic Control and Supporting Air Traffic Services) Enterprise Agreement 2017-2020 and thereby contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act) (the Consultation Contravention).

2    By failing to maintain the status quo by reinstating a set of guidelines regulating the use of grey days in the Byron Group Air Traffic Control roster after being notified by Civil Air of a dispute in relation to the withdrawal of those guidelines, Airservices failed to comply with cl 10.1(g) of the Airservices Australia (Air Traffic Control and Supporting Air Traffic Services) Enterprise Agreement 2017-2020 and thereby contravened s 50 of the FW Act (the Status Quo Contravention).

63    The primary judge rejected submissions made by the appellant that the declarations should not be made because they:

(a)    were too general and lacked precision;

(b)    did not show the full context in which the contraventions occurred including the breadth of the dispute between the parties; and

(c)    had no utility, having regard to the considerations set out in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at 87 [90]-[93] (Dowsett, Greenwood and Wigney JJ).

See PJ at [34].

64    His Honour set out the appellant’s submissions in that regard in the penalties judgment as follows:

35    I accept that the dispute before the FWC was broader than the alleged contraventions now before the Court. Civil Air was unsuccessful on some of its claims before the FWC and on the claims on which it succeeded, its success was limited to the Byron Group only and did not include other groups of ATCs. The context which Airservices contends is missing from the proposed declarations includes that:

(a)    the genesis of the dispute was Civil Air’s claim that the Guidelines were consistent with cl 19.18 of the EA. Because that claim concerned the proper construction of cl 19.18, it went further than ATCs in the Byron Group; rather, it applied to ATCs wherever they were employed. The FWC did not accept Civil Air’s construction of the clause and found that on its proper construction, cl 19.18 did not mean that Airservices could only utilise an employee rostered on a grey day shift to fill a “direct” vacancy in a roster caused by the absence of an employee rostered to work. Instead, it permitted Airservices to utilise an employee rostered on a grey day shift to fill both direct and consequential vacancies in the roster (FWC [d]ecision at [149]);

(b)    Civil Air’s claims that Airservices failed to consult before withdrawing the Guidelines, and that it failed to maintain the status quo by not reinstating the Guidelines, went further than the 18 ATCs in the Byron Group. Those claims were pressed in relation to all Brisbane-based operational groups, which covered more than 200 ATCs, or at least in relation to both the Byron Group and the Brisbane Tower Group. In relation to the Brisbane Tower Group, the FWC did not accept Civil Air’s claims in respect of an obligation to consult or in respect of a requirement to maintain the status quo by reinstating the Guidelines. It found that those obligations only applied in relation to the Byron Group (FWC [d]ecision at [90] and [132]); and

(c)    Airservices refused Civil Air’s claims for consultation and for the reinstatement of the Guidelines in circumstances where it was or at least considered itself to be bound by the 2012 FWA Decision in relation to the construction of a materially identical predecessor to cl 19.18. It submits that the 2012 FWA Decision construed the predecessor to cl 19.18 consistently with Airservices’ proposed construction of cl 19.18, which construction was confirmed as correct by the FWC.

36    Based on that Airservices submits that the proposed declarations should not be made because they are shorn of the context in which the contraventions occurred. It argues that it would be very cumbersome to qualify the declarations in a way that properly contextualises the contraventions, and in those circumstances they should not be made.

37    Airservices also submits that the proposed declarations should not be made because the breaches of the EA have already been brought to the attention of the public and other relevant entities through the publication of the FWC [d]ecision on the FWC website and on www.austlii.edu.au, and also through the publication of the jurisdiction judgment by this Court. It says that the FWC set out its findings including the findings of contravention of cll 8 and 10.1(g) of the EA in a manner that was accessible to the public and which puts those findings in their full context including: (a) the history of the matter including the 2012 FWA Decision; (b) that the FWC determined the construction of cl 19.18 in Airservices’ favour; (c) that the FWC found that the Guidelines were not “policies” of Airservices within the meaning of the EA; and (d) the particular circumstances of the contraventions, including their scope being restricted to the Byron Group, and their short duration. It says that all the proposed declarations add to that already written in the FWC [d]ecision is that a person contravenes s 50 of the FW Act by contravening a term of an enterprise agreement, and that fact is readily apparent on the face of the section.

38    It contends that, in circumstances where the FWC [d]ecision has already been published, and having regard to the fact that the proposed declarations do not disclose the full context in which the contraventions occurred, they:

(a)    are not an appropriate vehicle through which to record the Court’s disapproval of Airservices’ contravening conduct;

(b)    are not necessary to vindicate Civil Air’s claims of contravention;

(c)    will not assist anyone in carrying out duties under the FW Act, nor in clarifying the law, because they add nothing of substance to the terms of the FWC [d]ecision;

(d)    will not inform employees of any “dangers” arising from Airservices’ conduct; and

(e)    will not operate to deter contraventions of the FW Act as all they do is summarise some of the findings in the FWC [d]ecision.

39    Airservices further submits that as a matter of discretion and having regard to the broader context of the dispute resolution role performed by the FWC, the Court should not grant declaratory relief in situations such as the present where the FWC resolved the dispute as an arbitrator under the EA. It contends that the proposed declarations would introduce a level of formality and consequences quite foreign to the FWC performing its functions and exercising its powers in a manner that is “quick, informal and avoids unnecessary technicalities” (FW Act, s 577). For example, the FWC “may inform itself in relation to any matter before it in such a manner as it considers appropriate” (FW Act, s 590(1)); it is not bound by the rules of evidence and procedure (s 591) nor is it required to even conduct a hearing (s 593(1)); and the default position in a matter before the FWC is that a person cannot be legally represented without permission of the FWC (s 596). Airservices submits that a decision made in such a setting is not an appropriate basis for this Court to make declarations.

(The reference by the primary judge to the “2012 FWA Decision” is to a decision of Fair Work Australia in 2012 in relation to a materially identical predecessor to cl 19.18. See PJ at [30].)

65    His Honour then turned to discuss the principles applicable to the granting of declaratory relief.

66    His Honour, among other things, cited the following passages from Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at 87 [90]-[93] (Dowsett, Greenwood and Wigney JJ):

The fact that the parties have agreed that a declaration of contravention should be made does not relieve the Court of the obligation to satisfy itself that the making of the declaration is appropriate … It is not the role of the Court to merely rubber stamp orders that are agreed as between a regulator and a person who has admitted contravening a public statute …

The facts necessary to support the declaration may be established by agreed facts …

The Court has a wide discretionary power to make declarations under s 21 of the [Federal Court Act] … Before making a declaration, the Court should be satisfied that the question is real, not hypothetical or theoretical, that the applicant has a real interest in raising the issue, and that there is a proper contradictor …

Declarations relating to contraventions of legislative provisions are likely to be appropriate where they serve to record the Court’s disapproval of the contravening conduct, vindicate the regulator’s claim that the respondent contravened the provisions, assist the regulator to carry out its duties, and deter other persons from contravening the provisions …

(Citations omitted.)

67    His Honour then quoted this passage from the judgment of Nicholson J in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730; (2007) ATPR ¶42-140 at 46,726 [6], which was adopted by the Full Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at 87 [93], finding that declarations sought in that case were appropriate because they:

1.    [were] an appropriate vehicle to record the Court’s disapproval of the contravening conduct … ;

2.    serve[d] to vindicate the Commission’s claim that the respondents contravened the Act … ;

3.    [were] of some assistance to the Commission in the future in carrying out the duties which are conferred upon it by the [Trade Practices Act 1974 (Cth)] … ;

4.    [were] of assistance in clarifying the law … ;

5.    may inform consumers of the dangers arising from a respondent’s contravening conduct … ; and

6.    may deter corporations from contravening the Act …

(Citations omitted.)

68    His Honour then found that having regard to those principles, he was satisfied that it was appropriate to make declarations of contravention broadly in line with those proposed by the respondent, for the following reasons:

45    First, Airservices’ written submission that the proposed declarations are too broad and lack precision can be speedily dealt with. That submission was based on the declaratory relief claimed in the originating application which said:

On the grounds stated in the Statement of Claim, the Applicant claims:

…

2    Pursuant to s 21 of the FCA Act and s 545 of the [FW] Act, a declaration that the Respondent has contravened s 50 of the [FW] Act by its contraventions of clause 8 of the [EA].

3    Pursuant to s 21 of the FCA Act and s 545 of the [FW] Act, a declaration that the Respondent has contravened s 50 of the [FW] Act by its contraventions of clause 10 of the [EA].

46    By the time of hearing, Civil Air had filed the proposed declarations in the detailed form set out at [33] above [see [62] above]. In my view they are stated with sufficient precision and are not too broad.

47    Second, Airservices contends that the context in which the contraventions occurred includes that its breaches of cll 8 and 10.1(g), and thus its contraventions of s 50 of the FW Act, flowed from its (correct) understanding of its obligations under cl 19.18. The gist of this submission is that declarations should not be made because it enjoyed success before the FWC in relation to the primary issue in the dispute - the proper construction of cl 19.18 of the EA.

48    This contention eludes the point. Airservices’ obligation to consult with Byron Group ATCs before it withdrew the Guidelines, and its obligation to maintain the status quo by reinstating the Guidelines, arose irrespective of which party prevailed on the issue as to the proper construction of cl 19.18. Whatever the proper construction of that clause Airservices was obliged to comply with the obligation to consult and to maintain the status quo.

49    Third, Airservices submits that the proposed declaration in relation to the Consultation Contravention should not be made because it would be shorn of the context that:

(a)    Civil Air’s claim for consultation extended well beyond the Byron Group ATCs (who the FWC found were the only employees entitled to be consulted).

The contention that the claim for consultation extended well beyond the Byron Group ATCs is correct, but Airservices’ argument is misconceived. It was required to consult with ATCs before withdrawing the Guidelines. It is not really to the point that after Airservices had failed to comply with that obligation, Civil Air (wrongly) claimed an entitlement to consultation in relation a broader range of ATCs. By the time Civil Air made that claim Airservices had already breached its obligation to consult and its contravention of s 50 had already occurred; and

(b)    Airservices did not consult with Byron Group ATCs in circumstances where it was or at least considered itself bound by the 2012 FWA Decision.

This contention has no force because there is no evidence that Airservices failed to consult because it was or at least considered itself bound by the 2012 FWA Decision, and the FWC made no such finding. The FWC found that Mr Bassingthwaite withdrew the Guidelines no later than 13 May 2018 when he emailed staff advising that he had deleted the Guidelines as the document was “misleading and incorrect” (FWC [d]ecision at [70]). Before me, Mr Nugent testified that Mr Bassingthwaite did so because they were “no longer fit for purpose due to several reasons”, including operational reasons such as “changes to the master roster”. I do not accept that the 2012 FWA Decision was material to the context in which the Consultation Contravention occurred.

50    Relatedly, Airservices contends that the declaration Civil Air seeks in relation to the Status Quo Contravention should not be made as it does not include the context that:

(a)    Civil Air’s demand for reinstatement of the Guidelines was in fact a demand for their reinstatement across all operational groups in Brisbane whereas they only applied to the Byron Group.

I am not persuaded that the breadth of Civil Air’s claim for reinstatement is material to the context in which this contravention occurred. It is correct that Civil Air sought reinstatement of the Guidelines to all Brisbane-based operational groups but Mr Nugent gave evidence that this made no difference to Airservices’ decision to refuse to reinstate them. He said that even if Civil Air had only sought reinstatement for Byron Group ATCs, Airservices would not have agreed to do so; and

(b)    Airservices did not reinstate the Guidelines in the Byron Group after being notified of the dispute because it was or at least considered itself bound by the 2012 FWA Decision not to do so.

I accept that the 2012 FWA Decision informed Airservices’ view that maintenance of the status quo did not require reinstatement of the Guidelines in the Byron Group. But, as the FWC found, Airservices was wrong in its view that the 2012 FWA Decision represented the status quo. Its misapprehension in this regard, however reasonable, does not lead to the conclusion that the declaration should not be made. In any event, as I later explain, the evidence shows that the 2012 FWA decision was just one of Airservices’ reasons for refusing to reinstate the Guidelines, and the reasonableness of its position should not be overstated.

51    In any event, I can see little merit in the contention that declarations should not be made unless they reveal the full context in which a contravention occurred. Airservices points to no authority in support of that argument and there is no rule or requirement that declarations must set out or summarise all of the surrounding context. Ordinarily the salient surrounding circumstances will be set out in reasons for judgment.

52    Fourth, the preconditions for declaratory relief referred to in Forster v Jododex Australia Pty Limited [1972] HCA 61; 127 CLR 421 at 437-438 (Gibbs J as his Honour then was) are made out:

(a)    there is a real question as to whether Airservices contravened s 50 of the FW Act by failing to consult with ATCs in the Byron Group prior to withdrawing the Grey Day Guidelines from use in that group, as required by cl 8 of the EA; and in failing to maintain the status quo by not reinstating the Guidelines for the Byron Group upon notification of the dispute, as required by cl. 10.1(g) of the EA;

(b)    Civil Air has an obvious interest in bringing the proceeding, as the industrial organisation representing the interests of ATCs employed by Airservices in the Byron Group; and

(c)    as the alleged contravenor of s 50, Airservices has an interest in opposing the relief, notwithstanding its admissions made subject to its contention that the Court lacks jurisdiction.

53    Fifth, I consider the proposed declarations have utility, as they:

(a)    are an appropriate vehicle to record the Court’s disapproval of the contravening conduct. The fact that Airservices’ breaches of the EA may have already been brought to the attention of the public through publication of the FWC [d]ecision is not really to the point. The FWC had no power to make a finding of contravention of s 50 of the FW Act; to make declarations of contravention of s 50 of the FW Act in relation to Airservices’ breaches of the EA; nor to impose a pecuniary penalty on Airservices. Airservices’ submission fails to appreciate the difference between the proceeding in the FWC and this proceeding, which is not just an extension of what occurred in the FWC. The declarations will record this Court’s disapproval of the contravening conduct;

(b)    will vindicate Civil Air’s claims in this Court that Airservices contravened s 50 of the FW Act by its breaches of the EA;

(c)    will inform others, including other persons and organisations that deal with Airservices, of the nature of Airservices’ contravening conduct;

(d)    will make clear to the public and to other statutory agencies and persons subject to enterprise bargaining agreements of the harm caused by such contravening conduct … ; and

(e)    should, in conjunction with pecuniary penalties, operate to deter Airservices from a repetition of similar conduct, and deter other companies and organisations from similar conduct.

54    Sixth, I do not accept Airservices’ submission that the Court should not grant declaratory relief in circumstances where the FWC determined the dispute in a private arbitration, as that would introduce a level of formality and consequence which is foreign to the FWC performing its functions and exercising its powers in a manner that is “quick, informal and avoids unnecessary technicalities”: s 577 of the FW Act.

55    As I have said, the Court is satisfied to the requisite standard that Airservices contravened s 50 as alleged. Further, to the extent that finding is based in the FWC [d]ecision, I reiterate my remarks in the jurisdiction judgment (at [116]-[117]), as follows:

… the parties agreed on the dispute resolution procedure in cl 10.1 of the EA and it was open to them to select an independent person other than the FWC to settle any disputes that arose, and to agree upon the processes that would be used in any arbitration. The parties chose the FWC and must have known that the FWC could inform itself in such manner as it considers appropriate (s 590(1)), and was not required to follow the rules of evidence and procedure (s 591). It is appropriate to infer that the parties understood and were content with the manner in which any dispute that arose would be determined by the FWC, and content that any finding would be final and binding subject to their right to appeal to the Full Bench.

Further, to the extent that by this contention Airservices seeks to insinuate that the FWC’s processes in the present case were somehow deficient, or that it did not receive procedural fairness, that must also be rejected. The Questions for Determination by the FWC were identified with precision, both parties were legally represented including by senior and junior counsel, evidence was adduced by way of witness statements provided in advance of the hearing and the witnesses were available for cross-examination. The FWC provided comprehensive reasons, and neither party appealed the result. In my view the parties enjoyed an abundance of procedural fairness.

Imposition of pecuniary penalty

69    The primary judge considered the following factors to be relevant to the question of fixing the penalties in the circumstances of the present case:

(a)    the importance of the rights in question;

(b)    the seriousness of the contravening conduct;

(c)    whether the contraventions arose out of the conduct of senior management;

(d)    the impact of the contravening conduct;

(e)    whether the appellant “took the odds”;

(f)    the duration of the contravening conduct;

(g)    the size and nature of the appellant;

(h)    whether the appellant had shown contrition or remorse;

(i)    whether the appellant had taken corrective or remedial action;

(j)    whether there had been similar previous contravening conduct by the appellant; and

(k)    the requirement for specific and general deterrence.

70    I will deal with the primary judge’s reasons in respect of the factors the subject of challenge by the appellant when I deal with the relevant grounds of appeal below.

GROUNDS 1 AND 2 – JURISDICTION

Submissions on appeal

71    The appellant submitted that the primary judge erred in deciding that there was a “matter arising under” the FW Act such as to give the court jurisdiction under s 562 and accordingly, that the declarations and penalties ordered by the primary judge should be set aside and the originating application dismissed.

72    The appellant submitted, as it submitted below, that:

(1)    One of the primary aims of the FW Act is to facilitate the settlement of industrial disputes. In keeping with that aim, an objective of the FW Act is to provide “accessible and effective procedures to resolve grievances and disputes”. One mechanism through which the FW Act achieves that objective is that pursuant to the terms of s 186(6) of the FW Act, the FWC can accept arbitral appointments to settle disputes “about any matters arising under” the relevant enterprise agreement.

(2)    Consideration is required to be given to the practical character of an enterprise agreement and the circumstances of employment within the industry to which it applies. Such provisions must be construed having regard to their evident/ultimate purpose of “providing accessible and effective procedures to resolve grievances and disputes”. Such clauses should be construed with an appreciation that industrial harmony is of value to industrial parties and that dispute resolution processes provide a means of restoring and maintaining industrial harmony by resolving disputation. The objective of achieving “a sensible industrial outcome” should also be attributed to the framers of the clause.

(3)    A narrow reading of a disputes clause which provides for disputes to be “resolved” after the procedure has already been followed would defeat the purpose of a dispute settlement clause, and may result in a clause that does not comply with s 186(6).

(4)    Where (as here) an arbitration clause in an enterprise agreement uses the term “matter”, this suggests that the ambit of the clause is to be viewed broadly as referring to an issue or concern or the existence of a dispute in fact. The legislature can be taken to have thought it undesirable that there be no way of resolving such disputes independently of the parties other than in the courts.

(5)    In construing an arbitral clause, “the presumed or imputed intention is … parties who enter into an arbitration agreement for commercial reasons ordinarily intend all aspects of the defined relationship in respect of which they have agreed to submit disputes to arbitration to be determined by the same arbitral tribunal”. Effect is also to be given to the general approach that “sensible parties do not intend to have possible disputes that may arise heard in two places”.

(6)    The scheme of the FW Act emphasises the resolution of disputes. If a party to a dispute resolution process can then proceed to bring proceedings seeking compensation, penalties or a declaration in respect of the matters that were the subject of dispute, then the FWC will not have resolved the dispute. Rather, it will simply have facilitated its further agitation.

(7)    A party who agrees to refer an arbitration to the FWC takes that body as it finds it. One aspect of the FWC’s statutory character is that it cannot impose penalties or make declarations. A party which submits to arbitration by the FWC should be taken to understand that the resolution of the dispute will occur without recourse to those remedies.

(8)    The consequences of the dispute being resolved by arbitration is that there no longer existed any dispute as between the appellant, the respondent, and members of the respondent covered by the EA. Those “matters” were extinguished by Commissioner Wilson’s decision.

(9)    As a consequence of the arbitral resolution of the dispute, there is now no vehicle for the respondent to ask the court to grant a declaration, or to order penalties (or other remedies that might have been available under s 545 or s 546 of the FW Act) in relation to the dispute. That is a consequence of the respondent’s election to have the dispute resolved by the FWC, a body incapable of granting such remedies. It is an outcome consistent with the statutory scheme, the object in s 3(e) of the FW Act, and the public policy that disputes about matters arising under an enterprise agreement be capable of effective resolution, without recourse to the courts.

73    The respondent’s case was, in substance, that the primary judge’s decision that there was a justiciable controversy was correct for the reasons he gave.

Consideration

74    The starting point is the now well settled proposition that an arbitration conducted by the FWC pursuant to a term in an enterprise agreement is a private arbitration, based on the consent of the parties. See Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645 at 658 [32] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 at 322 [35] (Dowsett, Tracey and Katzmann JJ).

75    And as the High Court explained in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645 at 658 [34], an arbitration clause contained in an enterprise agreement has effect according to, and depends for its validity upon, the general law:

The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award.

76    As the Full Court said in ALS Industrial Australia at 322 [39], “[t]he law relating to private arbitration has, since 1854, been the subject of substantial legislative change, including changes in the extent to which judicial intervention may detract from the finality of an arbitrator’s award”. But, as in that case, neither party on this appeal suggested that any such legislation applies here.

77    Under the general law, in order to determine whether a dispute has been, or may be, referred to arbitration, three questions may arise:

(1)    Is the dispute capable of being referred to arbitration? That is called the issue of arbitrability.

(2)    Is the dispute within the scope of the applicable arbitration agreement? That is a question of construction of the agreement.

(3)    Does the dispute fall within the scope of what was actually referred by the parties to the arbitrator?

See D St. John Sutton, J Gill and M Gearing, Russell on Arbitration (Sweet & Maxwell, 24th ed, 2015) at 77 [2-095].

78    In this case, each of those issues arises in the following ways.

79    First, is the respondent’s claim for declarations in respect of alleged contraventions of s 50 of the FW Act, and for the imposition of pecuniary penalties, a matter capable of being referred to arbitration?

80    Secondly, is that dispute within the scope of the arbitration clause contained in the EA?

81    Thirdly, if yes, does the dispute fall within the scope of what was actually referred by the parties to Commissioner Wilson?

82    If the answer to any of those questions is “no”, then it would follow that any issue about whether it was appropriate to make findings of contravention of the FW Act, and impose penalties, or grant related declaratory relief, was either incapable of being referred to private arbitration or, if it was capable, was not in fact so referred.

83    For the reasons that follow, each question must be answered in the negative. It thus follows that no relevant rights were ever capable of “merging” into the award, because they were never capable of being referred to arbitration, and, in any event, were not in fact so referred. The claims brought by the respondent under s 50 of the FW Act thus were and remained “a matter arising under” the FW Act within the meaning of s 562, as the primary judge concluded.

The dispute was not capable of being referred to arbitration

84    As Foster J said in WDR Delaware Corporation v Hydrox Holdings Pty Ltd (2016) 245 FCR 452 at 474 [124]-[125], [128]:

The issue of arbitrability goes beyond the scope of an arbitration agreement. It involves a consideration of the inherent power of a national legal system to determine what issues are capable of being resolved through arbitration. The issue goes beyond the will or the agreement of the parties. The parties cannot agree to submit to arbitration disputes that are not arbitrable.

The question of whether a dispute is arbitrable is to be determined by the application of the nation’s domestic law alone …

…

… it is uncontroversial that some disputes cannot be the subject of private arbitration. Examples [include]: criminal offences; divorce; custody of children; property settlement; wills; employment grievances; some intellectual property disputes; competition law disputes; and bankruptcy and insolvency.

85    As Allsop J (as the Chief Justice then was) explained in Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 98 [200], “[t]he types of disputes which national laws may see as not arbitrable” have the common elements “that there [is] a sufficient element of legitimate public interest … making the enforceable private resolution of disputes concerning them outside the national court system inappropriate” and that “the identification and control of these subjects [is] the legitimate domain of national legislatures and courts”.

86    In MJ Mustill and SC Boyd, The Law and Practice of Commercial Arbitration in England (Butterworths, 2nd ed, 1989) at 149, the learned authors explained (in a passage quoted in part by Deane and Gaudron JJ in Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 at 351-352):

English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not. The general principle is, we submit, that any dispute or claim concerning legal rights which can be the subject of an enforceable award, is capable of being settled by arbitration. This principle must be understood, however, subject to certain reservations.

…

[T]he types of remedies which the arbitrator can award are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state. For example, he cannot impose a fine or a term of imprisonment, commit a person for contempt or issue a writ of subpoena; nor can he make an award which is binding on third parties or affects the public at large, such as a judgment in rem against a ship, an assessment of the rateable value of land, a divorce decree, a winding-up order or a decision that an agreement is exempt from the competition rules of the EEC under Article 85(3) of the Treaty of Rome [which, the footnote added, was exclusively within the province of the European Commission].

(Footnotes otherwise omitted, emphasis added.)

87    Along similar lines, the learned authors of Russell on Arbitration at 71-72 [2-081] said:

There are … well-recognised categories of dispute that may not be capable of being resolved by arbitration and certain underlying principles that can be identified in determining whether a matter is arbitrable. In particular, a dispute will generally not be arbitrable if it involves an issue of public policy, public rights or the interests of third parties, or where the dispute in question is clearly covered by a statutory provision which provides for inalienable access to the courts. In these cases, as the Court of Appeal has confirmed, “even the most widely drafted arbitration agreement will have to yield”.

Crime. One of the accepted categories of dispute which is recognised as being incapable of being referred to arbitration is criminal proceedings leading to conviction and related penal sanctions such as a custodial sentence or a fine. These matters are reserved to the courts. However, that is not to suggest that any allegations or claims made in an arbitration which may give rise to the potential for criminal sanctions or reveal that a crime may be committed in the future (such as a claim for payments of a commission to be used for payment of a bribe) are not arbitrable. On the contrary, it is accepted that an arbitrator has jurisdiction to find facts which constitute a criminal offence, such as fraud, or in appropriate cases to find that a criminal offence has been committed [citing The London Steamship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain (“The Prestige”) (No 2) [2015] EWCA Civ 333 at [78]].

(Footnotes otherwise omitted.)

88    GB Born in his work International Commercial Arbitration (Wolters Kluwer, 3rd ed, 2021) vol I at 1029 states the position with respect to typical examples of nonarbitrable matters in different jurisdictions, as follows:

The New York Convention and other international arbitration conventions recognize, and permit Contracting States to apply, nonarbitrarily exceptions of this nature as an exceptional escape mechanism. Although the better view is that the Convention imposes international limits on Contracting States’ applications of the nonarbitrability doctrine … the types of claims that are nonarbitrable differ from nation to nation. Among other things, typical examples of nonarbitrable subjects in different jurisdictions include selected categories of disputes involving criminal matters; domestic relations and succession; bankruptcy; trade sanctions; certain competition claims; consumer claims; labor or employment grievances; and certain intellectual property matters. Over the past several decades, the scope of the non-arbitrarily doctrine has materially diminished in most developed jurisdictions.

As these examples suggests, the types of disputes which are nonarbitrable nonetheless almost always arise from a common set of considerations. The nonarbitrability doctrine rests on the notions that some matters so pervasively involve either “public” rights and concerns, or interests of third parties, that agreements to resolve such disputes by “private” arbitration should not be given effect. The rational was summarized, in evocative terms, by one U.S. appellate court:

“A claim under the antitrust laws is not merely a private matter. … Anti-trust violations can affect hundreds of thousands – perhaps millions – of people and inflict staggering economic damage. …We do not believe Congress intended such claims to be resolved elsewhere than in the courts.” [Citing Am. Safety Equip. Corp. v J.P.Maguire & Co., 391 F.2d 821, 826-27 (2d Cir. 1968).]

The court explained that the relevant statute, the Sherman Act, “is designed to promote the national interest in a competitive economy” and equated a private litigant asserting antitrust claims under the provisions of the Act with an agent of the government, reasoning “thus, the plaintiff asserting his rights under the Act has been likened to a private attorney-general who protects the public’s interest.” [Citing ibid at 826.] Other explanations of the rationale for the non-arbitrability doctrine are similar. [Citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 646-50 (U.S. S.Ct. 1985).]

(Footnotes otherwise omitted.)

89    In The London Steamship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain (“The Prestige”) (No 2) [2015] EWCA Civ 333; [2015] 2 Lloyd’s Rep 33 at 48 [77]-[78], Moore-Bick LJ (with whom Patten and Tomlinson LJJ agreed), having stated the obvious proposition that “[s]ince an arbitrator cannot convict a person of a criminal offence, the claim cannot be constituted in arbitration proceedings”, went on to say, in the passage referred to in Russell on Arbitration above:

It was not disputed that in the ordinary way an arbitrator has jurisdiction to find facts which constitute a criminal offence (fraud being an all too common example) or that in an appropriate case an arbitrator also has jurisdiction to find that a criminal offence has been committed. As the judge pointed out, however, it is necessary to distinguish between a finding of criminal conduct and a conviction which provides the basis for a penal sanction. It may also be important in this context to distinguish between a claim and a dispute or difference.

(Emphasis added.)

90    The purpose of the civil penalty regime contained in the FW Act “is ensuring compliance with norms of industrial behaviour prescribed by Parliament in the public interest”. See Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Broadway on Ann Case) (2018) 265 FCR 208 at 226 [69] (Logan J, with whom Tracey J agreed).

91    As French CJ, Kiefel, Bell, Nettle and Gordon JJ said in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at 494-495 [23]-[24]:

Since 1974, the Commonwealth has enacted a considerable number of civil penalty provisions. Some of those provisions are contained in legislation which provides for both civil penalties and criminal penalties … while, in other cases … the legislation provides only for civil penalties. In each case, however, the form of the civil penalty provisions is essentially similar.

In essence, civil penalty provisions are included as part of a statutory regime involving a specialist industry or activity regulator or a department or Minister of State of the Commonwealth (the regulator) with the statutory function of securing compliance with provisions of the regime that have the statutory purpose of protecting or advancing particular aspects of the public interest. Typically, the legislation provides for a range of enforcement mechanisms, including injunctions, compensation orders, disqualification orders and civil penalties, with or … without criminal offences. That necessitates the regulator choosing the enforcement mechanism or mechanisms which the regulator considers to be most conducive to securing compliance with the regulatory regime. In turn, that requires the regulator to balance the competing considerations of compensation, prevention and deterrence. And, finally, it requires the regulator, having made those choices, to pursue the chosen option or options as a civil litigant in civil proceedings.

(Emphasis added, footnotes omitted.)

92    Along the same lines, the majority of the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ) observed at 602 [9], 604 [15] and 611 [42]:

9    Under the civil penalty regime provided by the [FW] 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.

…

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 [Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482] said:

“[W]hereas 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 …”

…

42    [C]ivil penalties are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions.

(Footnotes omitted.)

93    In my view, a dispute about whether a party (here, the appellant) is liable for a contravention of s 50 of the FW Act, whether if so declaratory relief should be granted, and whether if so in what amount penalties should be imposed in respect of such contraventions (which I shall refer to collectively as a s 50 dispute), is a dispute that is covered by statutory provisions (including here, ss 546(1) and 50 of the FW Act) which requires determination only by the exercise of judicial power. That is because: (i) the issues that arise affect or potentially affect a person’s legal status; (ii) there is an important public interest in the determination of the questions of whether the contravention is established and if so, what penalty or other relief should follow, including in light of applicable principles concerning specific and general deterrence; and (iii) such disputes must be determined in open court and not privately.

94    For those reasons, in my view a s 50 dispute is not a dispute that is capable of being referred to arbitration.

95    Before turning to the question of whether the s 50 dispute is one within the scope of the arbitration clause contained in the EA, I should deal with one other point that was argued both below and on appeal. As noted above, the appellant submitted that having regard to the scheme of the FW Act, it was not open to the respondent to notify a dispute to the FWC about failure to comply with certain clauses of the EA, obtain a decision from the FWC by way of arbitration in relation to those alleged failures, and then subsequently make an application to this court under s 50 of the FW Act. In my opinion, the primary judge was correct to reject that submission. As the passage from The Prestige at [89] above makes clear, it is entirely consistent with orthodox principle that an arbitrator may make findings of fact or even make a finding of criminal conduct which does not involve, and cannot involve, a finding of conviction. And so it is here. In my view, it is entirely consistent with the scheme of the FW Act, and orthodox general principles, that an arbitrator may make binding findings of fact falling short of doing that which he or she is not permitted to do (including make declarations of contravention of the FW Act and impose penalties).

96    It was not disputed that in a case such as this, a party in the position of the appellant is estopped from denying the truth of such factual findings made by the arbitrator. The hearing before the primary judge proceeded on that basis. But the question of whether those facts thus established constituted a contravention of a civil penalty provision of the FW Act, whether declaratory relief should be granted, and whether penalties should be imposed and if so, in what amount, are all questions that are the exclusive preserve of the courts. In my view, the bifurcation of the process involves no difficulty at all and as I say, is consistent with orthodox principles of the type described in the passage from The Prestige.

97    It follows that the appellant’s submissions that because the respondent elected to arbitrate the dispute about the matters raised by the questions for determination, the Dispute Notification, and the concise summary (see [56] above), “there is now no vehicle for the [r]espondent to ask the Court to grant a declaration, or to order penalties (or other remedies that might have been available to the Court under s 545 or s 546 of the FW Act)” and, relatedly, that there is no longer any dispute capable of being resolved, must also be rejected.

Section 50 dispute not within the scope of the arbitration clause contained in EA

98    Clause 10.1(e) of the EA provided:

If conciliation (or such other alternative dispute resolution process as has been conducted by agreement of the parties) is not successful in resolving the dispute, or if the parties agree that they wish the FWC to settle the dispute without recourse to conciliation or another alternative dispute resolution process, the FWC can arbitrate the dispute and make a determination that is binding on the parties, subject to either party exercising a right of appeal against the decision to a Full Bench of the FWC.

99    The ascertainment of the scope of that clause is one of construction. Its meaning is to be determined by what a reasonable person would understand it to mean, having regard to its text, surrounding circumstances, purposes and objects. See, by way of example only, Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at 534 [44] (Kiefel CJ, Gageler, Nettle and Gordon JJ). Further, “[c]ontext will almost always tell one more about the objectively intended reach of such phrases than textual comparison of words of a general relational character”. See Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 496 [193] (Allsop CJ, Besanko and O’Callaghan JJ), cited with approval in Rinehart (2019) 267 CLR 514 at 529 [26].

100    It can readily be accepted, as the appellant submitted, that arbitration clauses, including those like the one here which permits arbitration of “a dispute about a matter arising under” the EA, are to be construed liberally. See, by way of example only, Hancock Prospecting (2017) 257 FCR 442 at 499 [204]. In my view, however, and in particular because the FWC does not have the authority to deal with disputes about whether a party has contravened a civil penalty provision of the FW Act, or to impose penalties or grant declaratory relief in respect of any contravention of a civil penalty provision, a reasonable person, having regard to that surrounding circumstance or context, would not understand a clause permitting the FWC to arbitrate “a dispute about a matter arising under [the EA]” as extending to civil penalty provisions contained in the FW Act.

101    Further, a reasonable person would not interpret the clause to permit a referral of a dispute that, in any event, is not capable of being referred to arbitration.

102    It is, of course, true, as the appellant submitted, that arbitration clauses should be read against the sensible presumption that parties do not intend the inconvenience of having possible disputes being heard in two places. See Hancock Prospecting (2017) 257 FCR 442 at 489 [166]. But that presumption has no relevance here, because the parties, for the reasons I have explained, cannot be taken to have agreed to submit to arbitration any dispute between them that involves issues that are within the exclusive authority of the courts to resolve.

The dispute does not fall within the scope of what was referred to the arbitrator in any event

103    It is axiomatic that an arbitrator may only decide those issues or disputes that are the subject of the relevant referral. The scope of the referral “is to be ascertained from the pleadings and from the underlying subject matter upon which the pleadings, including the defence, are based”. See Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCR 420 at 426 [18] (Merkel J); Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 at 343-344, 351-354.

104    The questions that Commissioner Wilson asked and answered in his reasons were the questions that constituted the metes and bounds of the referred dispute. It is readily apparent from reading the questions (see [56] above) that nowhere are the parties to be taken to have asked the Commissioner to arbitrate the question of whether the appellant was liable for a contravention of s 50 of the FW Act, whether if so declaratory relief should be granted, and whether if so in what amount penalties should be imposed in respect of such contraventions.

Conclusion regarding jurisdiction

105    It follows that no issue arises about the jurisdiction of this court to hear the respondent’s proceeding.

106    The appellant accepted that if ground 1 was rejected, ground 2 falls away.

GROUND 3 – THE PRIMARY JUDGE CORRECTLY GRANTED DECLARATORY RELIEF

107    By ground 3, the appellant contended that the primary judge erred by exercising his discretion under s 21 of the Federal Court Act to grant declaratory relief.

108    There is no merit in this ground.

109    Appellate review of the exercise of that discretion is confined by the principles in House v The King (1936) 55 CLR 499 at 504-5 (Dixon, Evatt and McTiernan JJ), viz:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

110    As the respondent correctly submitted, the appellant’s case on appeal did not suggest that the primary judge made any error of the type necessary to pass muster under House v The King. On the contrary, the appellant’s submissions, which are in substance a restatement of its case below recorded by the primary judge at [64] above, seek to re-argue the merits of the judge’s decision.

111    As the respondent said in its written submissions, and I agree:

The detailed reasons of the primary judge on the question of whether declarations ought to be made evidence that the primary judge identified the relevant principles, had regard to each consideration advanced by both parties, and engaged in a thoughtful and deliberative evaluation about whether declarations were appropriate. No error is made out.

112    Ground 3 thus fails.

GROUNDS 4, 5 AND 12 – THE PENALTIES IMPOSED BY THE PRIMARY JUDGE WERE MANIFESTLY EXCESSIVE

113    The primary judge ordered that pursuant to s 546 of the FW Act, the appellant pay a pecuniary penalty of $40,950 in relation to the Consultation Contravention, and $31,500 in relation to the Status Quo Contravention. The maximum penalty in each case was $63,000. The penalties imposed were thus 65% and 50% of the maximum. By grounds 4, 5 and 12, the appellant contended that the primary judge erred in deciding that its contraventions warranted the imposition of penalties of 65% and 50% of the maximum, or by imposing penalties which were manifestly excessive.

114    As the Full Court of this court (Greenwood, Middleton and Foster JJ) stated in Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172 at [53]:

To the extent ASIC says the penalty was ‘manifestly inadequate’, the inadequacy must be ‘obvious, plain, apparent, easily perceived or understood and unmistakeable. It must be so far outside the range of reasonable discretionary judgement as to itself bespeak error’: Hanks v The Queen [2011] VSCA 7 at [22]; Zerafa v The Queen [2013] VSCA 42 at [41]. Mere disagreement, or a difference of opinion, between an appellate court and a primary judge over the penalty imposed is not sufficient.

115    It is well settled that a penalty set at a level that is manifestly excessive having regard to the nature of the conduct in respect of which it is imposed is one that involves a miscarriage of the court’s discretion. See Wong v The Queen (2001) 207 CLR 584 at 605-606 [58] (Gaudron, Gummow and Hayne JJ).

116    In my view, penalties set at 65% and 50% of the maximum available were manifestly excessive because they were, with great respect to the learned judge, wholly outside the range of sentencing options available.

117    As the appellant contended, and the primary judge himself found:

(a)    the failure to consult was limited to 18 employees who were employed by the appellant in its Byron Group as ATCs (PJ at [140]);

(b)    the window for any consultation was short (PJ at [140]);

(c)    the respondent did not “adduce evidence from a single ATC to the effect that he or she was adversely affected by the withdrawal of the Grey Day Guidelines, or by the failure to reinstate them once the dispute was notified” or “even identify an individual ATC working in the Byron Group during the relevant period who was adversely affected by the withdrawal of the Guidelines” (PJ at [99]);

(d)    the respondent “did not establish that withdrawal of the Guidelines resulted in a material increase in Byron Group ATCs being called in to work when rostered on grey day shifts” (PJ at [106]); and

(e)    the appellant’s “conduct was not covert and its breaches were not surreptitious” (PJ at [153(b)]).

118    Having regard to those findings made by the primary judge, in my view the penalties imposed were not necessary in order to realise the relevant deterrent effect. Cf Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599.

119    It is obviously more efficient for this court on appeal to re-exercise the discretion, not remit the matter to the primary judge. Having regard in particular to the matters listed above, in my view a penalty set at 20% of the maximum ($12,600) in each case is appropriate.

120    As I explain below, I agree with the primary judge that the contraventions do not form a single course of conduct and that s 557 of the FW Act and the course of conduct principle have no application here.

121    I should also say that considering the total penalty of $25,200, I am satisfied that the total penalty is just and proportionate to the contravening conduct and the surrounding circumstances.

THE REMAINING GROUNDS ARE WITHOUT MERIT

122    In my view, each of the remaining grounds of appeal fails.

Grounds 6 and 7 – The course of conduct and totality principles

123    The primary judge held that s 557 of the FW Act was not engaged because the two contraventions of s 50 of the FW Act did not arise out of a course of conduct.

124    The primary judge’s reasons in that regard were as follows:

59    Section 557 of the FW Act relevantly provides:

Course of conduct

(1)    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.

(2)    The civil remedy provisions are the following:

…

(c)    section 50 (which deals with contraventions of enterprise agreements);

…

(3)    Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.

60    The common law course of conduct principle recognises that where there is a sufficient interrelationship between the legal and factual elements of the acts or omissions that constitute contraventions, the Court may, absent legislative direction, in its discretion, penalise the acts or omissions as a single course of conduct. The question as to whether contraventions should be treated as a single course of conduct involves consideration of all the circumstances of the case. The principle was explained in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 194 IR 461 (Middleton and Gordon JJ) at [47]:

What the single course of conduct principle recognises is that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality.

61    Airservices contends that there is a clear interrelationship between the legal and factual elements of the Consultation Contravention and the Status Quo Contravention, both of which flowed from Airservices’ belief that its obligations in respect of consultation and/or maintenance of the status quo were impacted by the 2012 FWA Decision. It argues that its contravening conduct should be grouped as a single course of conduct so as to ensure that it is not punished more than once for the same conduct.

62    This contention fails at the first hurdle. There is no evidence that the 2012 FWA Decision played any part in Mr Bassingthwaite’s failure to consult before he withdrew the Guidelines on 13 May 2018, and the FWC made no such finding. In oral submissions Senior Counsel for Airservices appeared to accept that.

63    Further, even if (contrary to my view) Airservices’ reliance on the 2012 FWA Decision was an element of the Consultation Contravention, I do not accept that s 557 or the common law course of conduct principle mean that the contraventions should be treated as one. The conduct in relation to the two contraventions is separate and distinct as it involved:

(a)    withdrawal of the Guidelines without first consulting with Byron Group ATCs, which decision was made by Mr Bassingthwaite no later than 13 May 2018; and

(b)    failure to maintain the status quo by refusing to reinstate the Guidelines, which decision was made at the national Service Manager’s meeting on 5 July 2018 and confirmed by Mr Nugent’s letter of 11 July 2018.

The Consultation Contravention was complete on 13 May 2018. The Status Quo Contravention commenced no later than 5 July 2018 and continued until 11 May 2019. The decisions were made about different matters, by different people, at different times and in different places.

64    Section 557 and the course of conduct principle have no application in the circumstances of the present case.

(Emphasis added.)

125    The appellant’s submission in chief on grounds 6 and 7 was as follows:

In circumstances where the contraventions flowed from Airservices’ withdrawal and non-reinstatement of the same iteration of Guidelines, which it considered (rightly) were inconsistent with the terms of the Agreement, both contraventions had the common element of the 2012 FWA Decision, and both contraventions concerned only the same 18 ATCs, the primary judge erred by holding that s 557 and the course of conduct principle did not have application. Further, given the commonality of the circumstances of both contraventions, the primary judge erred when imposing total penalties of $72,450, by failing to have any or sufficient regard to the totality principle.

126    I disagree. As Middleton and Gordon JJ said in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 at 13 [41], course of conduct is a “principle [which] recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the Court must ensure that the offender is not punished twice for the same conduct”.

127    As the respondent contended, the primary judge’s reasoning – and in particular the emphasised part of the quote from his Honour’s reasons above – was correct, and “[t]he factors identified by the primary judge were more than sufficient to support the conclusion that the contraventions were not part of a course of conduct”.

128    The totality ground is equally without merit. It is abundantly clear that the judge had regard to it. He expressly stated that he applied the totality principle as a final check and was satisfied that the aggregate penalty was just and proportionate. See PJ at [163] (“Standing back and considering the total penalty of $72,450 I am satisfied that the aggregate penalty is just and proportionate to the contravening conduct and the surrounding circumstances”).

Ground 8 – Taking the odds

129    The primary judge reasoned in the penalties judgment as follows:

109    Civil Air submits that Airservices “took the odds”, in the sense discussed in in Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 193; 131 FCR 529. In that case the Full Court (Wilcox, French (as his Honour then was) and Gyles JJ) considered an appeal from a decision in which the penalty imposed by the trial judge was at the bottom of the range, for reasons which included the trial judge’s view that: (a) the contravenor had obtained legal advice from its solicitors to the effect that the relevant conduct would not be a contravention of the Trade Practices Act 1974 (Cth) (TPA); (b) the legal advice was relevantly unqualified; and (c) the question as to whether the relevant conduct contravened the TPA was a most difficult one on which minds could differ and had not been previously agitated in a Court: see Universal Music at [306].

110    The Full Court emphatically rejected that approach and observed at [308] – [310]:

[308]    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.

[309]    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.

[310]    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 (Trade Practices Commission v Carlton & United Breweries Ltd (1990) 24 FCR 332 at 540; J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 at [184] to [185]; and Australian Competition and Consumer Commission v Simsmetal Ltd (2000) ATPR 41-764 at [16] to [21]. If a company ‘takes the odds’, it must expect serious consequences if it miscalculates. As was said by the Full Court in NW Frozen Foods Pty Ltd v ACCC 71 FCR 285 at 294-295:

‘The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay …’

111    Civil Air submits that, at the least, Airservices’ contravening conduct ran a serious risk of being in breach of the EA and consequently the FW Act. In relation to the Status Quo Contravention, it says that it repeatedly asked for reinstatement of the Guidelines, and argues that Airservices’ refusal to do so must have been done with an appreciation of the risk that it could be wrong. It says that Airservices must be treated as having “taken the odds” and it must suffer “serious consequences” for its miscalculation.

112    Airservices rejects that contention. It submits that the comments of the Full Court in Universal Music must be read as a whole and in context, and says that it is in a particular context – relating to anti-competitive conduct in contravention of Part IV of the TPA – that the Full Court referred to the principle that a company that “takes the odds” should expect serious consequences if it miscalculates. It says that, as explained by the Full Court, “the difficulty of detecting and proving contraventions of Pt IV of the [TPA] requires adequate penalties to be imposed when contravening conduct is detected and established”: Universal Music at [310], citing Trade Practices Commission v Carlton United Breweries Ltd [1990] FCA 357; 24 FCR 532 at 541 (Northrop J).

113    Airservices also argues that the present case is nothing like the kinds of cases referred to in Universal Music at [310]. It submits that its withdrawal of the Guidelines and its refusal to reinstate the Guidelines were not secret. It communicated its position on those issues to Civil Air at the time, it participated in a bona fide way in the FWC proceeding, and it was successful in relation to the construction of cl 19.18. It also says there was minimal, if any, impact on ATCs in the Byron Group and that there is nothing in the present case which warrants the “serious consequences” that Civil Air proposes.

114    I do not accept that the application of the Full Court’s remarks in Universal Music is as limited as Airservices submits. The Full Court was explicit at [308] – [310] that whether or not a party appreciates that there is a risk of its conduct contravening the TPA (and therefore whether or not it has made an assessment of the contravening nature of its conduct) is irrelevant or is of minimal weight in determining the penalty: see also Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2005] FCAFC 236; 224 ALR 390 at [49] (Stone and Allsop JJ as his Honour then was). Nor is the application of the remarks in Universal Music limited only to the anti-competitive conduct provisions of the TPA (and now the ACL): see e.g. Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd (No 3) [2021] FCA 282; 304 IR 85; Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480; United Firefighters Union of Australia v Country Fire Authority (No 2) [2017] FCA 1614.

115    In relation to the Consultation Contravention, Mr Nugent said that the Guidelines were withdrawn by Mr Bassingthwaite because he considered them “no longer fit for purpose due to several reasons”, including operational reasons such as “changes to the master roster”. There is no evidence that Mr Bassingthwaite was aware of the consultation obligation in cl 8 of the EA, nor that he obtained legal or other advice before he withdrew the Guidelines. However an ATC Line Manager in his position should have been aware of that obligation, and Airservices is not entitled to a discount on penalty because he did not know of the obligation (if that was the case). There is no evidence that Mr Bassingthwaite deliberately contravened the EA by withdrawing the Guidelines without consulting the Byron Group ATCs; but, the requirement for consultation was obvious, and it is appropriate to infer that Airservices took a risk that withdrawing the Guidelines without first consulting with affected ATCs would breach the EA.

116    In relation to the Status Quo Contravention, I accept that, in part, Airservices’ failure to maintain the status quo occurred because it was or considered itself to be bound by the 2012 FWA Decision. But as I have said, in circumstances where Airservices voluntarily agreed to introduce the Guidelines in February 2017, and permitted them to operate until May 2018, the proposition that the 2012 FWA Decision represented the status quo involved something of a leap and a risk that it might breach the EA. Similarly, to the extent that Airservices’ decision to refuse to reinstate the Guidelines was made on the basis that they were no longer fit for purpose, were not an official policy or procedure of Airservices, and/or were issued in error, that too involved a risk that it would breach the EA.

117    In this sense Airservices “took the odds” by refusing to reinstate the Guidelines. However, contrary to Civil Air’s submissions, it does not automatically follow that Airservices must suffer “serious consequences”. There is no such inflexible rule arising out of Universal Music at [308]-[310]. The assessment of an appropriate penalty is far more nuanced, and requires that all relevant circumstances be taken into account. Amongst other things, the fundamental purpose of a penalty is deterrence, both specific and general. Where conduct is undertaken believing it to be innocent, and the evidence shows that the contravenor, having been disabused of its belief, will not or is likely not to reoffend, specific deterrence will be of less significance: [Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68] at [64].

130    The appellant complains that in this reasoning the primary judge erred because:

The current case is nothing like the kinds of cases referred to by the Full Court in Universal Music at 599 [310]. The decision to withdraw the Guidelines on 13 May 2018, and Airservices’ position in relation to the status quo, were communicated to the Byron Group ATCs and Civil Air respectively at the time, and referred to in Airservices’ evidence to the FWC. Airservices participated actively, and in a bona fide way, in the FWC proceedings, and indeed it was successful in relation to the Construction Question relating to the main provision in dispute. There was no material increase in the 18 Byron Group ATC’s being called in to work as a result of the withdrawal of the Guidelines. There is nothing in this case which warranted penalties totalling $72,450.

131    The appellant also contended that the primary judge made “an error or principle” because “Universal Music concerned the question of whether a discount on penalty should be provided, not whether having ‘taken the odds’ was an aggravating factor”.

132    Each of those contentions is without substance, and each seems to me to be founded on a misreading of what the primary judge actually said.

133    On the supposed error of principle, it is quite plain that the primary judge recognised that the notion of a contravener taking the odds is not one that leads to a higher penalty. As his Honour correctly said:

(1)    “whether or not a party appreciates that there is a risk of its conduct contravening the [relevant Act] (and therefore whether or not it has made an assessment of the contravening nature of its conduct) is irrelevant or is of minimal weight in determining the penalty” (PJ at [114]);

(2)    “Airservices is not entitled to a discount on penalty because [the ATC Line Manager] did not know of the obligation [to consult] (if that was the case)” (PJ at [115], emphasis added);

(3)    “[t]here is no such inflexible rule arising out of Universal Music at [308]-[310]” (PJ at [117]); and

(4)    “[t]he fundamental purpose of a penalty is deterrence, both specific and general” and “[w]here conduct is undertaken believing it to be innocent, and the evidence shows that the contravenor, having been disabused of its belief, will not or is likely not to reoffend, specific deterrence will be of less significance” (PJ at [117]).

134    There is no error of principle contained in any of those observations. On the contrary, they are consistent with the cases. As the Full Court (Allsop CJ, Davies and Wigney JJ) observed in Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68 at 86 [64]:

[There is no] inflexible legal rule arising out of Universal Music at [308]–[310] or [Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2005) 224 ALR 390] at [49]. Usually a belief in the innocence of conduct that is a contravention of the statute is not an ameliorating factor. Nevertheless the object of the imposition of a penalty is substantially deterrence — specific and general. It is relevant to know that the conduct was done believing it to be innocent and knowing that the party, now disabused of its belief, will not, or is likely not to, reoffend. Specific deterrence in such circumstances is of less significance.

135    As to the appellant’s first point, in my view it was open to the primary judge to conclude, as he did, that in relation to the Consultation Contravention, the appellant “took a risk that withdrawing the Guidelines without first consulting with affected ATCs would breach the EA”, and in relation to the Status Quo Contravention, that the appellant’s conduct “involved a risk that it would breach the EA”. That said, it is tolerably clear that that primary judge, in particular from the last sentence in [117] of the penalties judgment (“Where conduct is undertaken believing it to be innocent, and the evidence shows that the contravenor, having been disabused of its belief, will not or is likely not to reoffend, specific deterrence will be of less significance”) did not regard the relevant risk run by the appellant as amounting to very much in the process of fixing the penalty.

Ground 9 – Absence of apology

136    By ground 9, the appellant contended that the primary judge erred in deciding that the absence of an apology for the Consultation Contravention pointed to the need for specific deterrence. This point is equally meritless, and leads nowhere in any event, because the primary judge found in respect of the Consultation Contravention that although “[t]here was … occasion for [the appellant] to apologise to affected ATCs”, the absence of contrition was “not an aggravating factor in terms of penalty” (PJ at [121]).

Ground 10 – Cost of doing business

137    The appellant contended that the primary judge “erred in deciding that there was a heightened need for a penalty sufficient to provide specific deterrence to Airservices and to impose a penalty ‘sufficient to ensure that it does not see such conduct as merely a cost of doing business’”. In particular, the appellant referred to the primary judge’s observation that it was not “the first time it has been found to have breached an obligation to consult under an enterprise agreement and thereby to have contravened s 50” (PJ at [126]), citing Civil Air Operations Officers’ Association of Australia v Airservices Australia [2019] FCA 1542. The appellant made the same submission on appeal that it made before the primary judge, namely that that decision was delivered more than 12 months after the events which led to Commissioner Wilson’s decision, and almost six months after its publication.

138    There is no doubt that a judge may properly take into account that any penalty must be sufficient to ensure that a contravener does not see such conduct as merely a cost of doing business. See Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 at 605 [17] (“a civil penalty … must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”). And, as the primary judge correctly observed, “it is established that offending conduct which occurred before the immediate offence, but which was not the subject of conviction until after the commission of the immediate offence, may still be relevant to sentence” (PJ at [130]). The judge thus did nor err in principle in saying (PJ at [156]) that:

[T]he decision to impose the penalty that I have is because there is a need to impose a penalty sufficient to deter Airservices from again breaching its obligation to consult. It is a large and well-resourced statutory corporation and the penalty imposed must be sufficient to ensure that it does not see such conduct as merely a cost of doing business.

Ground 11 – Insufficient appreciation of seriousness

139    Ground 11 is that the primary judge erred in deciding (PJ at [156]) that the appellant “continues to show insufficient appreciation of the seriousness of its failure to consult” by reference only to its closing written submission that “[t]he Court should not impose any pecuniary penalties against [it]. If any pecuniary penalties are imposed at all, they should be at the very low end of the scale”. The notice of appeal refers to PJ at [156], and adds “see also [138], [140] … being a reference only to its submissions to the Court as to the seriousness of the contravention and the appropriate penalty”.

140    Paragraph 138 of the penalties judgment reads:

First, Airservices’ contention that the breaches found by the FWC “flowed from” its understanding of its obligations under cl 19.18 of the EA misunderstands the seriousness of its breaches of cll 8 and 10.1(g). Essentially it contends that its contraventions are somehow less serious because it was correct in relation to the construction of the clause which was the genesis of the dispute. That minimises the importance of the obligations under cll 8 and 10.1(g) which existed irrespective of which party prevailed on the construction question, and indicates that Airservices still fails to fully appreciate the importance of those obligations.

141    Paragraph 140 of the penalties reads:

Third, Airservices’ submission - that the requirement for specific deterrence must be considered in the context that the impact of its failure to consult was minimal - is overstated. It can be accepted that its failure to consult affected only the 18 ATCs in the Byron Group, the window for any consultation to occur was short, and Civil Air did not establish that its unilateral withdrawal of the Guidelines had material adverse effects on the ATCs. But the importance of Airservices’ failure to consult was that the Byron Group ATCs considered the Guidelines to be valuable and (as the FWC found) they foresaw significant fatigue, social and familial consequences from working on grey day rosters. They had an entitlement to be consulted before the Guidelines were withdrawn and thus an opportunity to persuade Airservices to leave them in place. Had Airservices consulted as required under the EA, it would have been required to bring an open mind, capable of persuasion, to the process of consultation ([Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (2010) 268 ALR 514] at [43]). Civil Air may have been able to persuade Airservices not to withdraw the Guidelines, which it should be recalled were introduced by agreement of the parties. The right to consultation is a valuable right in and of itself. Airservices’ continued failure to recognise this indicates a need to impose a penalty sufficient to deter it from a repetition of similar conduct.

142    The submission in respect of ground 11 was put in the appellant’s reply submission as follows:

As a matter of public policy, litigants should be permitted to put submissions to the Court – in relation to discretionary decisions to be made by the Court – as to how that discretion should be exercised. That includes how contraventions should be characterised and the appropriate penalty to be imposed. Litigants should not be punished, by the imposition of higher penalties than would otherwise be the case, for putting submissions that are otherwise open.

143    In my view, as a matter of principle, a judge is entitled to conclude, based on a party’s submissions, that the party by those submissions revealed that it failed to appreciate the seriousness of a particular contravention and that the need for specific deterrence was therefore higher than it otherwise might have been. So the ground fails on the question of principle that it raises.

144    In this case, however, in my view, for the reasons I have given earlier in these reasons, the primary judge erred in regarding the two contraventions as serious and thus warranting the imposition of penalties at the mid to mid-high end, and should instead have imposed penalties at the lower end of the range because of the matters set out at [117] above.

DISPOSITION

145    For the foregoing reasons, I would dismiss the appeal, save on grounds 4, 5 and 12, which I would allow.

Associate:

Dated:    19 October 2022

REASONS FOR JUDGMENT

SNADEN J:

146    I have had the benefit of reviewing a draft of O’Callaghan’s J reasons. I respectfully agree with his Honour’s conclusions and with the reasons that his Honour identifies in support of them. I wish to address only three matters, all briefly. I shall do so adopting his Honour’s defined terms.

147    The first two matters relate to questions with which the appeal was not concerned.

148    It was accepted below and here that the dispute resolution provisions of the EA empowered the FWC to exercise powers of private arbitration in order to “deal with” the dispute that arose between the parties. That acceptance appears heavily to be based upon the High Court’s conclusions in the “Private Arbitration Case”: Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645. That matter involved questions about a dispute resolution clause that was contained within an agreement that was made by an employer and a union (each in their capacity as parties to an interstate industrial dispute of the kind contemplated by s 51(xxxv) of the Commonwealth Constitution). This matter pertains to a similar clause contained within an “enterprise agreement” made pursuant to pt 2-4 of the FW Act; and, specifically, to the resolution of a dispute that arose between the appellant (one of the parties that made that agreement) and the respondent (which was not such a party). Having not been the subject of argument (either before the primary judge or on appeal), it is unnecessary to venture any opinion as to whether or not the same principles apply. It is appropriate to proceed upon the assumption that they do.

149    Likewise, no issue arises on appeal as to whether, or to what extent, the parties should here be bound by the findings to which the FWC was drawn in determining the dispute that was before it. Before the primary judge, the appellant conceded that it had contravened s 50 of the FW Act in the ways that the respondent alleged. The primary judge observed that it had likely done so because “…it was estopped from denying the breaches of the EA”. Whether or not any such estoppel might have arisen had the appellant taken a different course below is a question that may be reserved for consideration in a matter that requires it.

150    The third and final matter concerns the declaratory relief that the learned primary judge granted. I have written previously about the circumstances in which such relief might or might not be warranted in civil penalty matters such as this one: see, eg, Construction, Forestry, Maritime, Mining and Energy Union v Milin Builders Pty Ltd [2019] FCA 1070 (Snaden J). In my experience, it is rarely warranted when sought as part of a suite of relief that includes the imposition of civil penalties. But so to observe is not to identify any miscarriage of the primary judge’s discretion to do as he did. The preponderance of authority holds that the court is entitled, if it considers it appropriate, to grant declaratory relief that records or summarises its conclusions: Cruse v Multiplex Ltd (2008) 172 FCR 279, 298 [53] (Goldberg and Jessup JJ, Gray J dissenting); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68, 87 [93] (Dowsett, Greenwood and Wigney JJ); cf Warramunda Village Inc v Pryde (2001) 105 FCR 437, 440 [8] (Gray, Branson and North JJ); Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378, 388 [35] (Greenwood, Logan and Yates JJ). The learned primary judge was entitled to form the views that he formed as to the appropriateness of declaratory relief and his discretion to grant it did not miscarry.

Associate:

Dated:    19 October 2022