FEDERAL COURT OF AUSTRALIA

Finance Sector Union v Commonwealth Bank of Australia

[2005] FCA 1847

INDUSTRIAL LAW – application by union for injunctive relief and penalties in respect of contraventions of the Workplace Relations Act 1996 (Cth) – form of injunctive relief appropriate to remedy discrimination suffered by employees – whether union is entitled to apply for relief in respect of contraventions concerning employers who are not members of the union – principles applicable to assessment of penalty for serious breaches of industrial law – whether the penalty imposed should be paid to the union

Workplace Relations Act 1996 (Cth) ss 178(1), 298K(1)(c), 298F, 298T, 298U, 347 and 356

Park v Brothers [2005] HCA 73 - cited

Maritime Union of Australia & Ors v Geraldton Port Authority & Ors (No 2) (2000) 94 IR 404 – cited

Laing v Victoria (2005) 144 FCR 462 - applied

Patrick Stevedores Operations No 2 & Ors v Maritime Union of Australia & Ors (1998) 195 CLR 1 - applied

Thomson Australia Holdings Proprietary Limited v The Trade Practices Commission & Ors (1981) 148 CLR 150 - cited

Burwood Cinema Ltd v The Australian Theatrical and Amusement Employees’ Association (1924) 35 CLR 528 - cited

Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) (1994) 94 IR 231 - cited

Australian Workers Union v Johnson Matthey (Aust) Inc [2000] FCA 728 - cited

Employment Advocate v National Union of Workers (2000) 99 IR 376 - cited

Automotive, Food, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (2000) 102 IR 175 – cited

Australian Nursing Federation & Ors v Alcheringa Hostel Inc (2004) 136 FCR 530 - cited

Alfred v Walter Construction Group Ltd [2005] FCA 497 - cited

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 - cited

Joyce & Ors v Christoffersen & Ors (1990) 26 FCR 261 - cited

Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission & Ors (1999) 93 FCR 317 - cited

Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 - cited

Commonwealth Bank of Australia v Finance Sector Union of Australia & Ors (2002) 125 FCR 9 - cited

Finance Sector Union of Australia v Commonwealth Bank of Australia [2004] FCA 257 - cited

Amcor Ltd v Construction, Forestry, Mining and Energy Union & Ors (No M311/2003) (2005) 214 ALR 56 - cited

Victoria University of Technology v Australian Education Union (1999) 91 IR 96- cited

Clothing & Allied Trades Union of Australia v Snuggleright Industries Pty Ltd (1990) 34 IR 124 - cited

CPSU, The Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 - cited

Schanka & Ors v Employment National (Administration) Pty Ltd (No 2) (2001) 114 FCR 379 - cited

Hawkesbury City Council v Foster & Anor (1997) 97 LGERA 12 – cited

Finance Sector Union v Australian and New Zealand Banking Group Ltd [2002] FCA 1035 - cited

Electrical Trades Union of Australia v Sims Products Ltd (trading as Besco Batteries) (1988) 42 IR 250 - cited

Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 70 IR 284 - cited

Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors  (No 2) (2001) 110 IR 372 - cited

Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 - cited

FINANCE SECTOR UNION OF AUSTRALIA v COMMONWEALTH BANK OF AUSTRALIA AND COMMONWEALTH SECURITIES LIMITED

VID 185 OF 2003

MERKEL J

16 DECEMBER 2005

MELBOURNE

IT BE DECLARED THAT:

1.         The first respondent contravened s 298K(1)(c) of the Workplace Relations Act 1996 (Cth) (‘the Act’) by altering the position of each of the employees employed in the positions described as Executive Manager, Relationship Manager or Assistant Relationship Manager as at September 2002 and identified in pp 20-26 of exhibit ‘EM‑1’ to the affidavit of Elvie Manaog sworn on 30 September 2005 (‘the relevant employees’) to the prejudice of those employees for a prohibited reason, namely that the employees were entitled to the benefit of one or more industrial instruments as defined in s 298B of the Act.

2.         The first respondent has breached cll 18.3.2, 18.3.4, 39.3 and 39.4 of the Commonwealth Bank of Australia (Core) Enterprise Bargaining Agreement 2000 and, as a consequence, is liable to have a penalty imposed on it in respect of the breaches under s 178(1) of the Workplace Relations Act 1996 (Cth).

3.         The first respondent breached cll 18.3.2, 18.3.4, 39.3 and 39.4 of the Commonwealth Bank of Australia Customer Service Division Enterprise Bargaining Agreement 2000 and, as a consequence, is liable to have a penalty imposed on it in respect of the breaches under s 178(1) of the Workplace Relations Act 1996 (Cth).

4.         The first respondent breached cll 17.3.2, 17.3.4, 37.3 and 37.4 of the Commonwealth Bank of Australia (Core) Enterprise Bargaining Agreement 2002 (‘the 2002 Core Agreement’) and, as a consequence, is liable to have a penalty imposed on it in respect of the breaches under s 178(1) of the Workplace Relations Act 1996 (Cth).

5.                  The certification order made by Senior Deputy President Duncan on 30 July 2002 certifying the Commonwealth Securities (CommSec) Development Agreement (2002) is void and of no effect.

AND IT IS ORDERED THAT:

6.         Subject to sub-para (f), in relation to each of the relevant employees who:

(a)               resigned from employment with the first respondent subsequent to 1 September 2002 and thereafter commenced employment with the second respondent; and

(b)              was employed by the second respondent to provide services in the first respondent’s Premium Financial Services Business Unit, now known as the Premium Business Services Business Unit; and

(c)               remains employed by the second respondent in a position providing services to the first respondent,

the first respondent shall, within 28 days of the making of this order, offer in writing employment to the employee, which the employee is entitled to accept, in a position in its employ which is equivalent to the position currently held by the employee in his or her employment with the second respondent upon the terms and conditions specified in (d) and (e) below.

(d)              For employees whose employment with the first respondent was regulated by the 2002 Core Agreement immediately prior to accepting employment with the second respondent, the offer of employment by the first respondent shall be on terms and conditions that:

(i)                    the position will be equivalent to the position currently held by the employee with the second respondent;

(ii)                   the remuneration will be equivalent to the 2002 Core Agreement rate that is most applicable to that equivalent position, plus the increases in remuneration in respect of that position since the making of the 2002 Core Agreement;

(iii)                 all other terms and conditions are to be as set out in the 2002 Core Agreement.

(e)               For employees whose employment with the first respondent was regulated by an Australian Workplace Agreement (‘AWA’) immediately prior to accepting employment with the second respondent, the offer of employment by the first respondent shall be under an AWA on terms and conditions that:

(i)                      the position will be equivalent to the position currently held by the employee with the second respondent;

(ii)                     the remuneration be equivalent to the average remuneration presently payable to employees of the first respondent employed under an AWA in that equivalent position;

(iii)                 otherwise, the terms and conditions be the common terms and conditions of AWAs currently applicable to employees in that equivalent position.

(f)          In the event that the parties agree in writing on the terms and conditions that are to be offered under this clause those terms and conditions shall be the terms and conditions to be offered but, if the parties fail to agree, the terms and conditions shall be as set out in this clause, provided always that the parties shall have liberty to apply in respect of any matter in dispute concerning those terms and conditions.

8.         The first respondent be restrained from inducing or attempting to induce any of the relevant employees to take up employment with the second respondent on terms and conditions of employment offered by the second respondent which do not provide for minimum entitlements enforceable under the Workplace Relations Act 1996 (Cth) that are at least equivalent to the minimum entitlements provided for in a Certified Agreement,  Australian Workplace Agreement or Award made under the Workplace Relations Act 1996 (Cth) and applicable to the employee as an employee of the first respondent, where such conduct is engaged in for a reason or reasons that include the reason that the employee is entitled to the benefit of a Certified Agreement,  Australian Workplace Agreement or an Award.

9.         A total penalty of $600 000 be imposed on the first respondent for its 259 breaches of s 298K(1)(c) which penalty is to be apportioned equally between those breaches.

10.       A total penalty of $150 000 be imposed on the first respondent under s 178(1) in respect of its breaches of certified agreements in May 2002 and of the continuation of those breaches from May 2002 to 6 December 2002 which penalty is to be apportioned as to $8 000 for the initial breaches and the balance is to be apportioned equally for each day the breaches continued.

11.       The total penalties of $600 000 and $150 000 be paid to the applicant.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The first respondent (‘CBA’) made a decision in May 2002 (‘the PFS decision’) to establish the second respondent (‘CommSec’) as the future employer of its managerial employees in the CBA’s Premium Financial Services business unit (‘the PFS business unit’).  In reasons for judgment handed down on 9 September 2005 (Finance Sector Union of Australia v Commonwealth Bank of Australia [2005] FCA 796) (‘the reasons for judgment’), which are to be read together with these reasons, I concluded that the making and implementation of the PFS decision by CBA during 2002 involved it employing an unlawful means to achieve an unlawful end.

2                     The unlawful means was constituted by CBA concealing the PFS decision from the applicant (‘FSU’) until after the decision was implemented.  The concealment resulted in CBA breaching its obligations to FSU under a number of terms of industrial instruments that were binding on CBA, which were described in the reasons for judgment as ‘CBA’s Industrial Instruments’.  Consequently, the Court is empowered to impose a penalty on CBA under s 178(1) of the Workplace Relations Act 1996 (Cth) (‘the WR Act’).

3                     The unlawful end achieved by CBA was the alteration of the position of 259 managerial employees in the PFS business unit (‘the relevant employees’) to the employees’ prejudice for a prohibited reason, namely that each of the relevant employees was entitled to the benefit of CBA’s Industrial Instruments.  Consequently, CBA contravened s 298K(1)(c) of the WR Act.

4                     In accordance with directions I gave, FSU and CBA each filed draft orders which they contended gave effect to the reasons for judgment.  The declarations and orders I propose to make are appropriate as they give effect to my reasons.

5                     As a result of the passage of time and my refusal to grant interlocutory relief, there are obvious difficulties in placing the relevant employees who commenced employment with CommSec in the position they would have been in had there been no contravention of s 298K(1)(c).  The orders seek to ensure, so far as is practicable, that those employees who wish to continue their employment with CBA, rather than CommSec, and therefore receive the benefit of the protection of the industrial instrument previously applicable to their current position, may do so.  However, the orders also seek to ensure that the relevant employees do not receive the most advantageous terms of both their current terms of employment with CommSec and of the applicable CBA Industrial Instrument.  In substance, the orders enable the employees to whom offers are to be sent to choose to regain the minimum industrial entitlements of which they were deprived when they entered into employment agreements with CommSec (‘cl 12 agreements’).  Thus, the orders seek to ensure that the relevant employees are not disadvantaged, in terms of the minimum entitlements conferred under the applicable CBA Industrial Instrument, by reason of CBA’s contravention of s 298K(1)(c).

6                     The remaining matter concerns the penalties that are appropriate.  During the course of the penalty hearing the respondents sought to raise a number of matters relating to liability that had not been raised at the hearing on liability.  In so far as those matters could have been tested or met by FSU adducing, or challenging, evidence in relation to those matters, it is not appropriate to allow them to be raised at the penalty hearing: see Park v Brothers [2005] HCA 73 at [33]-[34].  As a consequence, at the penalty hearing I ruled that the evidence filed by the respondents for the purposes of that hearing, which was also capable of being relevant to liability, was to be received only in relation to the quantum of any penalty, and not in relation to the liability of CBA in respect of that penalty.  The main reason for that ruling was that the issue of liability had been determined in the reasons for judgment on the basis of the pleadings and evidence before the Court at trial, as well as on the basis of the manner in which the respective parties chose to conduct their cases at trial.  In those circumstances, it would be unfair to FSU if the respondents’ evidence at the penalty hearing was able to be relied upon, directly or indirectly, in relation to liability, absent applications to amend the pleadings and to re-open the respondents’ case.  No such applications were made.

7                     The contraventions by CBA fall into two distinct categories; breach of s 298K(1)(c) and breach of industrial instruments attracting a penalty under s 178(1) of the WR Act.  Under s 298U(a)(i) (as it was at the time of the relevant conduct), a penalty of $10 000 could be imposed in respect of a contravention of s 298K(1).  It is clear that there is a separate contravention by CBA in respect of each of the 259 relevant employees: see Maritime Union of Australia & Ors v Geraldton Port Authority & Ors (No 2) (2000) 94 IR 404 at 412-413 [40]-[41], CPSU, The Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 229 [3], Automotive, Food, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (2000) 102 IR 175 at 179 [9] and Australian Nursing Federation & Ors v Alcheringa Hostel Inc (2004) 136 FCR 530 at 541 [35]-[36].

8                     FSU’s entitlement to apply for a penalty arises under s 298T of the WR Act.  At [19] of the reasons for judgment I stated:

‘Section 298T(1) provides for applications for orders under s 298U in respect of contraventions of s 298K(1): see Patrick Stevedores Operations No 2 Pty Ltd & Ors v Maritime Union of Australia & Ors (1998) 195 CLR 1 at 18 [4].  In the present case, no point was taken that FSU, as a registered organisation under the Act, did not have standing under s 298T to apply for orders pursuant to s 298U in respect of the discrimination claim.  It appears that FSU’s standing is likely to arise under ss 298T(1), 298T(2)(b) and 298F(2)(a) and (b) because CBA’s conduct in making and implementing the PFS decision was related to the fact that CBA’s Industrial Instruments were binding on it and applied to the employment of the relevant employees: see Maritime Union of Australia v CSL Australia Pty Ltd (2002) 113 IR 326 at 327-328 [4]-[7].’

9                     The relevant provisions are as follows:

‘298F  Civil Penalties

…

(2)       This Part applies to conduct carried out with a purpose or intent relating to:

(a)          the fact that an award, a certified agreement or an AWA applies to a person's employment; or

(b)          the fact that the person is bound by an award, a certified agreement or an AWA.

…

298T   Applications to the Court

(1)       Subject to subsection (4), an application may be made to the Court for orders under section 298U in respect of conduct in contravention of this Part.

(2)       The application may be made by:

(a)          the person, referred to in the provision in question, against whom the conduct has been, is being or would be carried out; or

(b)          in the case of a contravention of this Part by virtue of the operation of section 298D, 298E or 298F — an organisation of which the person is a member; or

(c)           in the case of a contravention of this Part by virtue of the operation of section 298G or 298H — an industrial association of which the person is a member; or

(d)          the Employment Advocate; or

(e)           any other person prescribed by the regulations.

…

298U   Orders that the Federal Court may make

In respect of conduct in contravention of this Part, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:

(a)              an order imposing on a person or industrial association whose conduct contravened or is contravening the provision in question a penalty of not more than:

(i)            in the case of a body corporate — 300 penalty units; or

(ii)     in any other case — 60 penalty units;

(b)              an order requiring the person or industrial association to reinstate an employee, or to re-engage an independent contractor;

(c)               an order requiring the person or industrial association to pay to an employee or independent contractor, or to a prospective employee or independent contractor, compensation of such amount as the Court thinks appropriate;

(d)              an order requiring the person or industrial association not to carry out a threat made by the person or association, or not to make any further threat;

(e)               injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to stop the conduct or remedy its effects;

(f)                any other consequential orders.’

10                  During the penalty hearing CBA raised for the first time an issue as to FSU’s entitlement to seek penalties or other relief in respect of employees who are not members of FSU.  It contended that, on a proper construction of the relevant provisions, penalties may only be imposed on the application of FSU in relation to contraventions by CBA in respect of FSU members.  The evidence establishes that, at the time of CBA’s contraventions in September 2002, 153 of the 259 relevant employees were members of FSU.  At the date of the commencement of this proceeding in April 2003, 149 of the relevant employees were members of FSU.  Only 73 of the 259 relevant employees elected to commence employment with CommSec and, of those employees, 40 were members of the FSU.

11                  One difficulty arising in respect of CBA’s contention is that, subject to FSU establishing its discrimination case, the respondents had not previously challenged FSU’s entitlement to the relief it claimed, which always included declaratory and injunctive relief, as well as penalties, in respect of each of the relevant employees irrespective of whether they were FSU members.  As a consequence, in the reasons for judgment I determined that FSU was entitled to relief in respect of each employee and adjourned the matter for a further hearing in relation to the penalties (if any) that were appropriate.  However, CBA claimed that its contention concerned the Court’s jurisdiction and power and contended, correctly in my view, that the Court was under a duty not to make orders it had no jurisdiction or power to make.  Also, the factual basis for CBA’s contention was the non-contentious issue of union membership.  In the circumstances, I permitted the issue of jurisdiction and power to be argued on the merits.

12                  Section 412(1) of the WR Act provides:

‘The Court has jurisdiction with respect to matters arising under this Act in relation to which:

(a)              applications may be made to it under this Act; or

(b)              actions may be brought in it under this Act; or

(c)               questions may be referred to it under this Act; or

(d)              appeals lie to it under section 422; or

(e)               penalties may be sued for and recovered under this Act; or

(f)                prosecutions may be instituted for offences against this Act.’

13                  In the present matter FSU has applied for orders, including the imposition of penalties, under s 298U of the WR Act.  FSU has standing to make that application by reason of ss 298T(1), 298T(2) and 298F(2) of the WR Act because the discriminatory conduct was carried out with a purpose or intent relating to the fact that CBA’s Industrial Instruments apply to the employment of the relevant employees (who include union members) and were binding on CBA, FSU and its members: see Maritime Union of Australia v Geraldton Port Authority (No 2) (2000) 94 IR 404 at 410-411 ([25]-[33]) per RD Nicholson J.  However, no decision has determined that a party that has standing to make an application under s 298U is confined to relief in respect of the interest or conduct that resulted in that party having standing.  Also, it is not self evident from the relevant statutory provisions that a person against whom discriminatory conduct is carried out, or a union bringing an application in respect of that conduct, only has standing under s 298T(2) to apply for orders under s 298U that are confined to himself, herself or union members (as the case may be).

14                  Significantly, the power to make orders under s 298U is not limited, directly or indirectly, by the circumstances or conduct that confer standing.  The power is to make one or more of the orders set out in the section ‘if the Court considers it appropriate in all the circumstances of the case’ to do so.  Similarly, the power conferred in s 298T(1) to bring an application for orders under s 298U is not so limited.  Rather, subject to the exception in s 298T(4), which prevents overlapping State or Territory applications, the application to the Court provided for in s 298T(1) is ‘for orders under section 298U in respect of conduct in contravention of’, inter alia, s 298K(1).

15                  Section 298T(2) relates solely to the standing of a person to bring an application under s 298T(1) and does not expressly limit the orders that may be sought in such an application.  Of course, a Court may decline to make orders that are unrelated to the applicant’s interest in, or standing to bring, an application under s 298T(1) but that is a matter of discretion, rather than jurisdiction or power.  I considered the effect of s 298T in Laing v Victoria (2005) 144 FCR 462 (‘Laing’) at 474 [37] where I observed:

‘…s 298T(1) is not subject to the application being by a person having standing under s 298T(2).  Rather, s 298T(1) is expressed to be subject to s 298T(4), which, although not relevant to the present case, does state the circumstances in which an application “cannot be made” under s 298T(1).  Thus, standing is not expressed to be a precondition to the conferral of jurisdiction.’

I also stated at 476 [47]:

‘The language employed in s 21 of the FCA Act and ss 412(1)(a) and 298T (1) of the WR Act does not warrant the conclusion that it is an imperative jurisdictional requirement under those provisions that only a person having standing to do so may apply for relief.’ (emphasis in original)

16                  The approach to jurisdiction set out above accords with the observations of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 & Ors v Maritime Union of Australia & Ors (1998) 195 CLR 1 at 28:

‘The applications which may be made to the Court under s 298T and the orders which may be made by the Court under s 298U are defined in the same terms, namely, "in respect of conduct in contravention of this Part". Counsel for the appellants submits that those words preclude the exercise of any of the powers prescribed by s 298U unless the Court is satisfied on a final hearing that the contravening conduct has in fact occurred. But s 298T is not defining a condition that must be satisfied before an application can be made or the jurisdiction to hear and determine the application can be exercised; that section is defining the subject matter of the Court's jurisdiction under the Act. Whether or not an application is "in respect of" contravening conduct depends not on the facts that are ultimately found but on the basis of the relief which is sought by the party invoking the jurisdiction. If the relief sought is an order of the kind prescribed in the lettered paragraphs of s 298U and if the basis of the relief is alleged conduct in contravention of Pt XA of the Act, the jurisdiction of the Court is effectively invoked.’

17                  A different situation would arise if FSU had failed to establish that the conduct in question fell within s 298F.  If that had occurred the Court would still have jurisdiction in the matter, as it is an application that may be made under s 298T(1), but would be required to dismiss the application on the ground of lack of standing to make it: see Laing at 477 [50].

18                  However, CBA contends that the jurisdiction conferred by s 412(1) does not operate independently of ss 298T(2)(b) and 298U.  It submitted:

‘… the effect of s.298T(2)(b), read in conjunction with s.298U and s.412(1) is that:

a.           [FSU] may make an application for orders under s.298U(a) and (e) only in respect of those employees who were members of the [FSU] at the time of the commencement of the proceeding;

b.           the Court’s jurisdiction under s.412(1)(a), (b) and (e) is limited to making orders under s.298U(a) and (e) in respect of CBA employees who were members of the [FSU] when the proceedings commenced.’

19                  In substance, CBA claims that, by reason of the above sections, the matter arising under ss 412(a), (b) and (e) is whether FSU’s members had their position prejudicially altered by reason of the members being entitled to the benefit of CBA’s Industrial Instruments.  CBA then claims that it follows that, for jurisdictional purposes, the matter is confined to the prejudicial alteration to the position of employees who were members of FSU.  Thus, CBA claims that the Court’s power to make a final order under s 298U(a) and (e) in respect of a contravention of Pt XA by reason of s 298F is confined to FSU members whose position has been prejudicially altered.

20                  The difficulty with CBA’s submission is that none of the sections upon which it relies confine the Court’s power to grant relief to union members or to the circumstances or conduct that resulted in FSU having standing to bring the application.  Indeed, the submission requires that s 298U be construed as being subject to a limitation that is not stated in the section, but which confines the relief that might be granted to the conduct establishing a party’s standing to make an application for relief: cf Thomson Australia Holdings Proprietary Limited v The Trade Practices Commission & Ors (1981) 148 CLR 150 at 161-162.  In the context of the WR Act, the Court should not lightly arrive at the conclusion that a union, which has standing to bring an application under s 412 by reason of ss 298T, 298F(2) and 298U, is confined to seeking relief in respect of its members.  The reason for that is that it has been accepted that a union’s interest in matters arising under Commonwealth industrial legislation is not necessarily limited to the union’s members: see Burwood Cinema Ltd v The Australian Theatrical and Amusement Employees’ Association (1924) 35 CLR 528.  That is so, inter alia, because employment of non-members of a union and conduct of employers in relation to those non-members can have a significant impact on the union and its members.  Thus, it is not an anomalous or unreasonable outcome for a union, which has standing under s 298T(2), to claim relief in respect of both members and non-members of the union where the discriminatory conduct affects both members and non-members of the union.

21                  Accordingly, I do not accept the contention of CBA that the Court does not have jurisdiction or power to impose penalties or grant other relief under s 298U in respect of the contraventions by CBA of s 298K(1)(c) in relation to both members and non-members of FSU.  Of course, that conclusion does not prevent CBA from submitting that, as a matter of discretion rather than jurisdiction, the Court should not impose penalties on CBA or grant other relief in respect of employees who are not FSU members.  No such submission was seriously pursued by CBA.  In any event, I can see no sound discretionary reason for confining the penalty in respect of the s 298K(1) contraventions to union members.  CBA’s unlawful conduct related to its employees irrespective of whether they were FSU members.  The consequences of its conduct was prejudicial to all of those employees.  Accordingly, union membership is not relevant to CBA’s conduct nor its consequences and therefore should not be able to be called upon by CBA, in mitigation of penalty or in respect of the other relief sought.

22                  It follows that the maximum penalty in respect of the contraventions of s 298K(1)(c) is $2 590 000 being $10 000 in respect of each of the 259 relevant employees.

23                  The matters that are relevant to penalty in relation to contraventions under Pt XA (which includes s 298K) were considered by Branson J in Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) (1994) 94 IR 231 at 232 ([7]-[8]):

‘The Act gives no explicit guidance as to the circumstances in which an order imposing a penalty under s 298U of the Act will be appropriate or as to the circumstances in which a penalty of or near the maximum, or alternatively of a lesser amount, may be called for.  The Court is simply directed to consider what is appropriate in all the circumstances of the case.

The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty:

(a)               The circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act);

(b)               Whether the respondent has previously been found to have engaged in conduct in contravention of Pt XA of the Act;

(c)               Where more than one contravention of Pt XA is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct;

(d)               The consequences of the conduct found to be in contravention of Pt XA of the Act;

(e)               The need, in the circumstances, for the protection of industrial freedom of association; and

(f)                The need, in the circumstances, for deterrence.’

24                  Her Honour’s observations have been cited and applied in relation to penalties under s 298U and other sections of the Act: see Australian Workers Union v Johnson Matthey (Aust) Inc [2000] FCA 728, Employment Advocate v National Union of Workers (2000) 99 IR 376 at 377 [5], Automotive, Food, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (2000) 102 IR 175 at 179-180 [10], Australian Nursing Federation & Ors v Alcheringa Hostel Inc (2004) 136 FCR 530 at 543-544 [44] and Alfred v Walter Construction Group Ltd [2005] FCA 497 at [10].

25                  The conduct of CBA that contravened s 298K(1)(c), namely the making and implementation of the PFS decision during 2002, was a single course of conduct that calls for the application of the totality principle: see Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 (‘Leahy’) at 285-286 [14].  Accordingly, rather than seeking to determine a separate penalty in respect of each contravention, it is appropriate to determine a total penalty which ought not to exceed what, in aggregate, is just and appropriate for the entire course of the contravening conduct.

26                  The circumstances in which the contravening conduct took place were considered in the reasons for judgment and need not be repeated.  They may be summarised as follows.

27                  CBA, acting through senior executive officers, carefully devised and implemented what I described in [1] of my reasons as an industrial regulation avoidance scheme that possesses an ingenuity that is reminiscent of the tax avoidance schemes of the 1970s.  The scheme resulted in the position of the relevant employees (irrespective of whether they were employed under the CBA Award, the CBA’s 2002 Core Agreement or AWAs) being altered to their prejudice as a consequence of the choice with which they were confronted, namely losing promotional, advancement and transfer opportunities in the PFS business unit if they remained employed by CBA, or being subjected to the legal and financial inferiority of the CommSec Agreement and the cl 12 agreements made pursuant to that agreement if they resigned their employment with CBA and commenced employment with CommSec: see [57]-[60], [61]-[66] and [94] of my reasons.  CBA claimed that a choice was given by CBA to the relevant employees.  That is correct to an extent but that does not meet FSU’s complaint that the choice was between losing opportunities if an employee remained employed by CBA and losing entitlements if the employee resigned and commenced employment with CommSec.

28                  CBA also claimed that, on the basis of the additional evidence it filed at the penalty hearing (which included evidence relating to bonus payments), the 73 relevant employees who commenced employment with CommSec were not subsequently paid less under the cl 12 agreements than they would have been paid under CBA’s Industrial Instruments.  That may not be surprising as it was essential to the successful implementation of CBA’s scheme that a substantial number of the existing CBA managerial employees in the PFS business unit, who were competent and trained, would voluntarily transfer over to CommSec.  That was not a likely outcome if the employees were to receive less as employees of CommSec than they were being paid, or would have been paid, as employees of CBA.  However, as I explained in the passages cited above, in so far as s 298K(1)(c) was concerned, the vice in CBA’s scheme for employees transferring to CommSec lay in the loss of the minimum financial entitlements conferred by CBA’s Industrial Instruments and in the legal inferiority of the cl 12 agreements made pursuant to the CommSec Agreement.  The loss of the financial and legal protections available under CBA’s Industrial Instruments is ongoing and significant as it makes the employees vulnerable to any changes to their terms of employment that their employer might choose to negotiate. The vulnerability arises because of the absence of the financial and legal protections available under CBA’s Industrial Instruments.  The so-called ‘adaptable platform of employment conditions’ included conditions that were free of the burden of CBA’s Industrial Instruments.  The ‘platform’ enabled CBA and CommSec, to use a cl 12 agreement as a vehicle to reduce rates of pay and to do so without the burden of dealing with FSU.

29                  Although the evidence relating to the payments made to the relevant employees employed by CommSec after the contravention had occurred is relevant, it fails to deal with the discrimination against the 186 CBA employees who elected to remain employed under CBA’s Industrial Instruments.  As a result of CBA’s discriminatory conduct, which is continuing, those employees lost the promotional, advancement and transfer opportunities within the PFS, and later the PBS, business units that they could have expected to enjoy had the PFS decision not been made.  CBA adduced evidence that some of the relevant employees who remained with CBA were in fact promoted or transferred.  However, any such promotions or transfers probably occurred because it was in CBA’s interest not to lose employees it wished to retain.  The fact remains that the PFS decision remains in force with the consequence that the loss of opportunities is continuing.

30                  In my view, CBA’s conduct struck directly at the freedom of association that Pt XA protects, which is one of the means by which the WR Act is to achieve the principal objective in s 3(e) of:

‘providing a framework of rights and responsibilities for employers and employees, and their organisations, which supports fair and effective agreement-making and ensures that they abide by awards and agreements applying to them;’

31                  CBA’s conduct is particularly serious because the discrimination by CBA is against its own managerial employees who, in good faith, agreed to EBAs or AWAs with CBA, only to be discriminated against by reason of the entitlements they had under those agreements.  Further, the conduct was engaged in by one of Australia’s largest corporations solely in pursuit of its self interest and profit and, so it would appear, without a proper regard for the legality of its conduct.

32                  The manner in which CBA set out to achieve its objective of having an ‘adaptable platform of employment conditions’ for CommSec’s new ‘clerical’ employees is also questionable.  At [112]-[113] of my reasons I stated:

‘112.    … However, the evidence I have outlined reveals a course of conduct on the part of CBA, presumably on the basis of legal advice, that raises matters of concern.  The evidence suggests that CBA and CommSec have implemented their objective of securing an ‘adaptable platform of employment conditions’ by:

           (a)         selecting CommSec to be the employer of managerial employees in the PFS business unit; and

           (b)         making an application to the AIRC for certification of the CommSec Agreement representing that the agreement was only to cover workers ‘performing essentially clerical work’ at CommSec’s Martin Place premises and that therefore the NSW Clerks Award was an appropriate award for the AIRC to use in applying the no-disadvantage test.

113.    The representation appears to be misleading as the CommSec Agreement was intended to and later did cover non-clerical employees (ie managerial employees) in CBA’s PFS business units throughout Australia in respect of whom the NSW Clerk’s Award was both disadvantageous and inappropriate as an award for the application of the no-disadvantage test.  Also, CBA and CommSec had carefully drafted the ‘clerical work’ definitions in the CommSec Agreement to enable them to categorise non-clerical employees as clerical employees.  Those matters do not appear to have been disclosed to the AIRC.  I have outlined my concerns about how the PFS decision was made and implemented as they may be relevant to the penalties that are appropriate in the circumstances.  Also, CBA may have an explanation that places the evidence I have described in a different light.  If so, it will be open to it to proffer that explanation during the penalty hearing.’

33                  CBA submitted that the conduct of the certification proceeding was by CommSec, rather than it, and therefore CommSec’s conduct should not be attributed to it.  I do not accept that submission.  Although CommSec is a separate legal entity, I was satisfied that CBA ‘was responsible for making and implementing the PFS decision’: see [3]-[5] of the reasons for judgment.  I would add that neither CBA or CommSec adduced evidence to the effect that CBA and its executives were not responsible for each step that resulted in the making and implementation of the PFS decision.  Plainly, the application to the AIRC was one of those steps.

34                  No evidence was adduced by CBA or CommSec at the penalty hearing which sought to place the evidence I described at [113] of the reasons in a different light.  Indeed, no evidence was adduced to explain why CBA’s contraventions should not be viewed as serious breaches of the WR Act.  In those circumstances, I infer that any such explanations would not be helpful to CBA’s case and that its contravening conduct was deliberate in the sense that it intended the consequences of its conduct with an awareness on its part of the real risk, or even likelihood, that it could be in contravention of s 298K(1).  CBA was nonetheless prepared to chance its day in court on those matters.  CBA’s case on penalty is also not assisted by the lack of any expression of regret, contrition or remorse concerning its contraventions.  CBA is also not assisted by the fact that, as at the date of the penalty hearing, it had not made a decision to bring to an end its discriminatory conduct in relation to the relevant employees who have not transferred to CommSec.

35                  The course CBA elected to take at the penalty hearing was, rather, to argue that the question of whether there was a contravention of s 298K(1)(c) involved difficult questions of fact and law and that it was reasonably open to CBA to believe that its conduct was lawful.  The problem with that argument is that CBA did not file evidence at the penalty hearing in respect of any such belief.

36                  CBA also contended that the AIRC had not been misled because it should have been apparent that the definitions of clerical employees employed by CommSec were so broad that they were capable of including the work of managerial employees.  I am not sure that that submission is correct as employment in a ‘clerical capacity’ has not been generally been regarded as extending to managerial employees: see for example Joyce & Ors v Christoffersen & Ors (1990) 26 FCR 261 at 271.  In any event, even if CBA’s contention as to the breadth of the definition is correct, it misses the point.  The ‘clerical employees’ route was selected in order, inter alia, to use the low minimum rates for clerical employees in the NSW Clerks Award as the appropriate award for the ‘no disadvantage’ test.  If CBA’s Award, which provides for the managerial classifications for the relevant employees to be distinct from the clerical classifications, had been drawn to the attention of the AIRC it may have had concerns about the CommSec Agreement.  Thus, the failure to disclose the intent and purpose of the CommSec Agreement and, in particular, its intended application to CBA’s managerial employees had the potential to mislead the AIRC.

37                  CBA argued that the failure to disclose the intended application of the CommSec Agreement to CBA’s managerial employees in the PFS business unit was justifiable because that matter was, as a matter of law, irrelevant to the certification of the CommSec Agreement.  It submitted that it was only necessary for the AIRC to be advised of the NSW Clerks Award because it was a relevant award in respect of persons ‘employed at the time’ of certification (ie CommSec’s existing clerical employees): see ss 170LK, 170LT and 170XE.

38                  However, in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission & Ors (1999) 93 FCR 317 at 353-356 [113]-[121] (‘CFMEU’) Wilcox and Madgwick JJ queried the applicability of the certification process to an agreement regulating the terms and conditions of employment ‘in a proposed single business’ where those terms and conditions were intended to apply to future employees.  The present case differs from that case as CommSec had an existing business with clerical employees but proposed to use the certified agreement in respect of CBA’s managerial employees who were to be employed by CommSec when it extended its existing business to provide the services of CBA’s PFS Business Unit.

39                  I need not finally determine this issue for the purposes of determining the validity of the certification of the CommSec Agreement for the reasons explained in [112] of the reasons for judgment.  The only question, which has an incidental relevance to penalty, is whether the disclosure to the AIRC was full, frank and appropriate.  In my view, the disclosures made probably did not meet those criteria.  The intended application of the CommSec Agreement to a class of managerial employees and to a category of business activity that did not then exist within CommSec, may have been relevant to the AIRC’s consideration of whether all of the conditions for certification had been met.  Whether those matters were relevant was a matter that should have been raised with, and determined by, the AIRC.  I do not regard it as likely that the non-disclosure of those matters was merely inadvertent or accidental.  CBA was aware of the significance of the distinction between clerical employees and managerial employees in the CBA Award and of the potential relevance of that distinction to the certification process before the AIRC.  Even if the disclosures that were made were adequate, that would not affect my view that CBA had exploited a loophole in the WR Act to enable some of its managerial employees to ‘slip through’ the ‘no disadvantage’ test in the WR Act in order to enable the CBA to achieve the future avoidance of industrial regulation in respect of those employees.  Thus, notwithstanding CBA’s contention to the contrary, I see no reason to depart from the view expressed in [1] of the reasons for judgment that CBA engaged in an ‘industrial regulation avoidance scheme’.

40                  The main factor that might be called in aid of CBA’s case on penalty is that there is no evidence of previous contraventions by it of Pt XA of the WR Act.  Nonetheless, there is a need for specific deterrence in the present case.  While it is correct that an injunction is being granted against further contraventions of s 298K(1)(c) by reason of s 298L(1)(h), there are many other possible contraventions of s 298K that might occur.  CBA’s lack of explanation, regret, contrition or remorse for its contravening conduct leaves me with little confidence about its future conduct.  CBA’s silence in respect of those matters entitles me to infer that, if CBA believes that the end is worthwhile, it may well see the risk of a potential contravention to be worth taking in the same way as it appears to have taken that risk in the present matter.

41                  However, the factor of greatest significance in relation to penalty in the present case is the need to impose a penalty that will constitute a general deterrent to others who may be disposed to engage in proscribed conduct of a similar kind.  In Leahy at [23] I cited the observations of Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 to the effect that, for a penalty to have the desired effect, it must be imposed at a meaningful level and therefore must be such that a potentially offending corporation will see the penalty as not worth the prospect of gain.

42                  The WR Act strikes a balance between employers and their organisations on the one hand, and employees and their organisations on the other hand.  Irrespective of whether the legislative pendulum has moved, or is moving, away from or towards awards, enterprise bargaining agreements or individual contracts, the one legislative constant has been the protection conferred by the freedom of association provisions, or their statutory predecessors in Pt XA.  It is the freedom guaranteed by those provisions that has enabled the balance previously struck by the legislature to continue to provide a framework that supports fair agreement making under the applicable legislative regime.  CBA’s conduct struck at the heart of that process because it undermined that freedom of association by discriminating against CBA employees because of their entitlement to the benefit of EBAs and AWAs that CBA had negotiated and agreed to with the FSU (the EBAs) or its managerial employees (the AWAs).  At a time when employees’ entitlements under industrial instruments might be shrinking to the most basic entitlements, it becomes more, rather than less, important that all employers, and particularly large employers, are deterred from injuring or prejudicially altering the position of their employees because of the industrial entitlements the employers had agreed to provide in accordance with the procedures laid down in the WR Act.

43                  The penalty that is appropriate in all the circumstances is one that deters not only CBA, but also other employers, from implementing schemes analogous to that created by CBA in order to prejudicially alter the position of employees because of their entitlements under industrial instruments made under the WR Act.

44                  I have concluded that the total penalty that is appropriate in all the circumstances in respect of CBA’s contraventions of s 298K(1)(c) is $600 000.  I would add that, because of the importance I have attached to general deterrence, I would not have arrived at a lesser penalty if the total penalty had been confined to contraventions in respect of FSU’s 153 union members or if, as was suggested by CBA, its conduct before the AIRC was not misleading or inappropriate.  I would also add that the penalty would have been significantly higher had CBA been found to have been involved in other relevant contraventions of the WR Act, or if there had been specific evidence of actual financial harm suffered by its employees as a result of its unlawful conduct.

45                  In considering the circumstances relevant to the contraventions of s 298K(1)(c), I have put to one side CBA’s concealment of the PFS decision from FSU, which resulted in it breaching the consultation and co-operation provisions of CBA’s Industrial Instruments.  Although the concealment was an integral aspect of CBA’s strategy in implementing the PFS decision without FSU intervention, I am satisfied that the resulting contraventions of certain of CBA’s Industrial Instruments should be viewed as conduct that is distinct from the s 298K(1)(c) contraventions and therefore should attract its own set of penalties.

46                  Section 178(2) provides that two or more breaches of an award or agreement should be treated as a single breach if the breaches arose out of one course of conduct.  In the present case, there were numerous breaches of CBA’s Industrial Instruments but the application of s 178(2) requires that the Court should treat the breaches as a single breach.

47                  Plainly, the totality principle should apply to CBA’s single, but continuing, breach which resulted in CBA failing to consult or cooperate with FSU between May 2002 (when the PFS decision was made) and about 6 December 2002 when I am satisfied that an executive officer of CBA finally met with FSU and unequivocally informed it that as a result of the PFS decision ‘there would be no positions or promotional opportunities for CBA employees within PFS’ and that there ‘would be no new positions for CBA employees in PFS’.  Throughout that period CBA (and CommSec) were implementing the PFS decision.  It is correct that prior to December 2002 the first offers of employment had been made by CommSec to some of the relevant employers and FSU officers had become aware of the existence of the PFS decision and had some discussions with CBA officers.  However, FSU’s requests for consultation concerning the decision did not result in any meaningful consultation until the meeting on 6 December 2002.

48                  Although there are a number of ways of computing an appropriate maximum penalty for the single, but continuing, breach, it is appropriate to treat the failure to consult and co-operate as one continuing breach of the relevant terms of CBA’s Industrial Instruments.  On the basis of the findings I made at [115]-[125] of the reasons for judgment, the breach commenced in about May 2002 and continued to 6 December 2002, ie for over 200 days.  It is common ground that s 178(4) (as it was at the time of the relevant conduct) provided that the maximum penalty was $10 000 for the single breach and $5 000 for each day the breach continues.  Thus, the total penalty that would appear to be able to be imposed under s 178 is of the order of $1 million.  It is of some relevance that the legislature has provided that the maximum penalty for the breach of a certified agreement is significantly greater than the maximum penalty for the breach of a provision of an award (see s 178(4)).

49                  In the course of the penalty hearing, CBA made certain submissions which, if accepted, would result in different findings on liability to those I made in the reasons for judgment.  In order to deal with those submissions it is necessary to restate the relevant provisions and my findings, which were set out at [114]-[125] of the reasons for judgment:

‘114.   FSU alleges that a penalty should be imposed on CBA under s 178(1) of the WR Act for breaches of cll 18.3.2, 18.3.4, 39.3 and 39.4 of CBA’s 2000 core EBA, of cll 18.3.2, 18.3.4, 39.3 and 39.4 of CBA’s 2000 EBA and of cll 17.3.2, 17.3.4, 37.3 and 37.4 of CBA’s 2002 core EBA, each of which is an agreement certified under s 170LT of the WR Act.  The alleged breaches arise as a result of the non-disclosure by CBA to FSU of the PFS decision.

115.     The relevant clauses in each of the three certified agreements differ slightly but the differences are not relevant to the breaches alleged.  There are two sets of clauses that are relevant.  The first set is expressed to “have effect in situations where the Bank is considering or implementing change that impacts upon working arrangements and could give rise to potential redundancy and/or redeployment situations” (cl 18.1.1 and cl 17.1.1 respectively).

116.     The three EBAs define “redundancy” to mean:

“a position redundancy where work (or a major portion of it):

(a)        is no longer required to be performed; or

(b)       is to be performed at a new location which requires a change in residence of the employee concerned;

as a result of re-organisation; changed business practice; technological change; downturn in business; a decision to reduce the number of employees; or a general reduction in classification levels or positions.”

117.    The requirement that the CBA inform FSU is as follows (in CBA’s 2002 core EBA, these clauses are numbered 17.3.2 and 17.3.4):

“18.3.2When the Bank has reviewed a work area, practice or function, the Bank will inform the FSU of the outcome and provide the FSU with the following information —

(i)      details of the new employee structure applicable to the area and an explanation of the impact;

(ii)     details of the positions to be abolished including position numbers where available; and

(iii)    details of the proposed date of implementation of the new structure.

…

18.3.4.  The FSU will have a period of two weeks from the time the information in terms of subclause 18.3.2 [or subclause 17.3.2 in the case of the CBA’s 2002 core EBA] is provided to seek discussions with the Bank on the proposals and to comment on the review findings.  The Bank will make its representatives available for discussions prior to implementing any findings.

…”

118.     The second set of relevant clauses reads (in CBA’s 2002 core EBA, these clauses are numbered 37.1, 37.2, 37.3 and 37.4):

“39.1  The Bank and the FSU recognise the importance of consultation and co-operation on major issues.

39.2     “Consultation” is defined as either party seeking the views of the other on major change issues before decisions are made, providing an opportunity of influence on the final outcome.  “Major change” is defined as change which is likely to impact significantly on employees and/or their work environment.

39.3     The Bank and the FSU agree that consultation on major change shall occur as follows:

            39.3.1   Each party will keep the other informed on matters of mutual interest and concern, and the Bank will inform the FSU at an early stage of proposals for major change.

39.3.2   Such issues will be raised as early as is practical to allow for consultation, and the views of each party are to be considered before finalisation of the initial recommendations for change.

39.3.3   As part of the consultation process, the initiator of the change will supply an estimate of the likely impact on existing arrangements.

39.3.4   It is recognised that, due to commercial imperatives, on rare occasions the consultative process may need to occur over a time frame as short as one day.  However, generally, either party will be given a minimum of one week to respond to proposals.  Such a period may be extended on request of either party.

39.3.5   Having regard to all the relevant input after completion of the consultation process, final decisions will be made by the Bank and early information will be provided to the FSU on those decisions and details of any new arrangements to be implemented.  Additional discussions may be sought by the FSU prior to implementation.

39.3.6   Commercial confidentiality will be respected by both parties.

39.4     All reasonable efforts will be made to achieve agreement on changes which are the subject of consultation.  Where agreements are made and either party subsequently decides to withdraw, in the absence of other provisions, not less than six weeks’ notice of intent to withdraw shall be given.  In these circumstances, the dispute resolution procedure will be followed.”

119.     It is common ground that, prior to the making and implementation of the PFS decision, CBA did not consult with FSU or notify or inform it of the PFS decision.  The evidence is that FSU first became aware of the PFS decision in October 2002 as a result of concerns expressed by some FSU members about the implementation of the PFS decision.

120.     The questions arising in respect of the first set of clauses are:

(a)        whether, prior to the PFS decision being made and implemented, there was a situation in which CBA was considering or implementing change that impacts upon working arrangements?

(b)        did CBA review a work area, practice or function?

(c)        could the change described in (a) give rise to potential redundancy and/or redeployment situations?

121.     If the questions in (a) and (c) are answered in the affirmative, it was not seriously in dispute that CBA was required to inform FSU of the PFS decision and its consequences for employees and did not do so.

122.     Prior to the PFS decision, CBA was plainly considering implementing change that impacted on the working arrangements of its employees.  It is also clear that CBA “reviewed” a work area, practice or function, being the PFS business unit.  As a result, a change was to be brought about by CBA ceasing to be the employer of employees engaged in the PFS business unit of CBA and CommSec becoming the employer of those employees.  The change impacted on “working arrangements” of the relevant managerial employers as it directly affected their promotional, advancement and transfer opportunities, as well as their future employment which was proposed to be by CommSec, rather than CBA.

123.     I am also satisfied that the change was one that could give rise to potential redundancy or redeployment situations.  The PFS decision resulted in CBA not engaging any new employees at manager level or below, and not creating any new positions, or filling any vacant positions, in relation to the employment of employees at manager level or below in the PFS business unit.  The evidence also shows that, as a result of the PFS decision, the positions affected by the decision were, over time, to be made redundant within CBA and were likely to result in redeployment of the employees affected by the decision within CommSec.  The potential redundancy was a “position redundancy”, rather than a “personal redundancy”, as the managerial employees faced the potential loss of managerial positions within CBA’s PFS business unit, rather than being made redundant personally.  Of course, co-incident with the loss of positions within CBA was the creation of equivalent positions within CommSec resulting in the potential redeployment of existing managerial employees to those equivalent positions.

124.     Thus, CBA was required, but failed, to inform FSU about the PFS decision, and that failure resulted in it breaching the first set of conditions in the three certified agreements.  Accordingly, FSU is entitled, under s 178(1) of the WR Act, to have penalties imposed by the Court in respect of the breaches.

125.     In respect of the second set of clauses, the question is whether CBA planned to implement “major change”, namely change which is likely to impact significantly on employees.  I am satisfied that the making and implementation of the PFS decision was likely to impact significantly on employees.  Earlier in these reasons, I found that the making and implementation of the PFS decision resulted in prejudicial alteration to the financial and legal position of the relevant employees.  For the reasons already given, I am satisfied that those consequences flowed directly from the PFS decision and had a real and substantial impact on the employees affected by the decision.  Plainly, prior to the making and implementation of the PFS decision, it was clear that the decision was likely to have the impact that it did on employees.  Accordingly, I am satisfied that CBA also failed to consult with FSU in respect of “major change” as required under the second set of clauses of the three certified agreements.  CBA therefore breached those clauses.  Thus, FSU is also entitled to the imposition of penalties under s 178(1) of the WR Act in respect of those breaches.’

50                  At the penalty hearing CBA claimed, and FSU did not dispute, that any breach of the second set of relevant clauses as set out in cl 39 (or cl 37) ceased when the PFS decision was made.  FSU accepted that the maximum penalty for the cl 39 (or cl 37) breaches should be $10 000 because the breaches of cl 39 are to be treated as a single breach (see s 178(2)) and there is no evidence about how long prior to the PFS decision being made CBA was considering ‘proposals for major change’.

51                  CBA advanced a further argument, which it did not advance at the liability hearing, that the first set of clauses (ie as set out in cl 18) did not attract any obligation on the part of CBA because, on the reasoning employed in Commonwealth Bank of Australia v Finance Sector Union of Australia & Anor (2002) 125 FCR 9 at 21-29 ([13]-[27]) and Finance Sector Union of Australia v Commonwealth Bank of Australia [2004] FCA 257 at [11] and [15], a redundancy situation did not arise.  In summary, CBA contended that those decisions, as well as the decision of the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union & Ors (No M311/2003) (2005) 214 ALR 56 (‘Amcor’), require the Court not to regard a redundancy situation as arising when the employees claiming to be redundant are entitled to continue in the same positions as they presently hold in the employment of a subsidiary or associated company.

52                  There are two problems with CBA’s new argument.  The first is that the cases on which it relies are concerned with whether the employer was obliged to pay to employees severance payments as a result of their positions having actually become redundant. The present case concerns the anterior question of whether the employer was required to consult with FSU because it was ‘considering implementing change that impacts upon working arrangements and could give rise to potential redundancy’ (emphasis added).  Thus, the obligation to consult can be attracted even if, in the events that may subsequently occur, there may not be an actual position redundancy.  Further, as was pointed out at 67 [52] in the joint judgment in Amcor in relation to a position redundancy clause:

‘… "Position" was not used in the Agreement as a legal term of art. It was used in a colloquial sense. In the collocation of words found in cl 55.1.1 (when understood against the background of the various considerations earlier mentioned) "position" refers to a position in a business — a business to or of which another employer may be successor, transmittee or assignee (whether immediate or not). If, for example, there had been some change in the terms and conditions offered by the new employer from those offered by Amcor, or there had been some change in the tasks to be undertaken by the employee, there may have been some question about whether the "position" continued. Issues of that kind do not arise in the present matter.’

53                  In the present case, the implementation of the PFS decision occurred throughout 2002.  As I explained at [123] of the reasons for judgment, it is clear that, from the outset, the change being sought by CBA was one that ‘could’ give rise to a ‘potential’ redundancy situation because the change being considered could give rise to work (or a major portion of it) no longer being required to be performed by CBA managerial employees in CBA’s PFS business unit as a result of re-organisation.  On the present state of the evidence the extent to which, the period over which, and the terms on which CBA employees were to be employed in ‘equivalent positions’ by CommSec were quite uncertain when the PFS decision was made in May 2002.  It was also uncertain as to whether there were to be changes in the tasks to be undertaken by the CBA employees who transferred to CommSec.  Indeed, CBA claimed that those matters were still being worked out during the implementation phrase after May 2002 and remained uncertain in many key respects throughout 2002.

54                  For example, it was not known until 31 July 2002 whether the CommSec Agreement would be certified and, even then, the first offers of cl 12 agreements were not made until September 2002.  Also CBA and CommSec claimed that the positions in CommSec required further training and some additional duties.  Thus, even if CBA’s new argument was permitted to be raised at the penalty hearing, I would not have been satisfied that the evidence justifies the finding it seeks, namely that the making and implementation of the PFS decision could not have given rise to a potential redundancy situation, and that the new argument justifies a departure from the findings I made in the reasons for judgment.

55                  There is, however, a fundamental difficulty with CBA being permitted to raise its argument for the first time during the penalty hearing.  It is self evident that, if the argument had been pleaded, or had it been raised in the submissions presented prior to, or in the course of, the hearing in relation to liability, its determination could have been affected by evidence.  In the circumstances, it would be unfair to now permit CBA to rely on the argument for the first time at the penalty hearing.

56                  Accordingly, I am satisfied that the breach by CBA of the first set of clauses (cll 17 and 18) commenced immediately prior to the PFS decision in May 2002 and continued through to December 2002 because, during the whole of that period, CBA was ‘implementing’ change that impacts on working arrangements that could give rise to potential position redundancy situations.

57                  In the reasons for judgment at [26], I indicated that the non-disclosure breaches appeared to be serious.  I stated that:

‘… on the evidence presently before me, the breaches appear to be serious because, subject to any explanation that might be proffered, they appear to be consistent with a plan to make and implement the PFS decision in a manner that ensured FSU, which would have opposed the PFS decision, was not aware of it until after it had already been implemented.’

58                  No explanation has been proffered in respect of CBA’s breaches.  CBA’s lack of explanation, regret, remorse or contrition leave me with little confidence that it may not endeavour to again act in breach of its industrial agreements if it thought it was worth its while to do so.  That situation is quite remarkable given the expectation in modern commerce that organisations, large and small, abide by their agreements.

59                  I am satisfied that the breaches were flagrant and deliberate and were calculated to enable CBA to implement the PFS decision, which I have found to be unlawful, before FSU could take action to prevent it from being a fait accompli.  If notice had been given to FSU I am in no doubt that it would have sought to prevent the implementation of the decision.  It might have challenged the AIRC’s jurisdiction to certify the CommSec Agreement and, more importantly, it would have been entitled to exercise its rights under cl 38 of  CBA’s 2002 Core Agreement to refer its dispute with CBA in relation to the PFS decision to the AIRC.  FSU might also have commenced this proceeding at an earlier time and had greater prospects of obtaining interlocutory relief.  Thus, the breaches had significant consequences for FSU.  They are plainly serious as they flout the statutory objective in s 3(e) of the WR Act of ensuring that ‘employers … abide by ... agreements applying to them’.  They also flout the dispute resolution procedures provided for in CBA’s 2002 Core Agreement that were intended to enable FSU to refer its disputes with CBA to the AIRC.

60                  Once again, I see the most important factor in relation to penalty as general deterrence.  Seeking to achieve any end by unlawful means should be deterred.  That is particularly so where the end is itself unlawful.  The changing rules of industrial regulation can be set at nought if the Court does not act strongly to discourage and deter the parties from flagrantly and deliberately breaching terms of freely made industrial agreements, merely because their own self interest later dictates against compliance with those terms.

61                  By enacting s 178(4) of the WR Act the legislature has recognised that breaches of a certified agreement are not only particularly serious but can be very heavily penalised when they are continuing breaches.  In my view CBA’s continuing breaches are at the most serious end of the spectrum of breaches of a consultation or disclosure clause as they were not only flagrant but they continued because it is likely that CBA saw it as necessary to prevent FSU becoming aware of the discriminatory conduct I have found to be unlawful.

62                  In the circumstances, I regard a total penalty under s 178(1) of $150 000 as appropriate.  I would add that, even if the continuation of CBA’s breaches was for the period to September 2002 that would not lead me to impose a different penalty as I have determined the appropriate penalty on the basis of the totality principle.  I would add that in arriving at the above total penalty I have had regard to the absence of any evidence of any previous imposition of penalties on CBA under s 178(1).

63                  The final matter relates to whether the penalty should be paid to FSU or into the Consolidated Revenue Fund.  Section 356 of the WR Act empowers the Court to order that the penalty, or part of the penalty, be paid into the Consolidated Revenue Fund or to a particular organisation or person.  However, in view of the legislative policy in s 347 (that costs orders are not to be made save where a party institutes a proceeding vexatiously or without reasonable cause) it is clear that the power to order payment of a penalty to a party under s 356 should not be exercised for the purpose of reimbursing to a party the costs incurred by that party: see Victoria University of Technology v Australian Education Union (1999) 91 IR 96 at 107 [34].  But, it does not follow that the costs incurred are irrelevant.  For example, evidence may be adduced to demonstrate the nature and extent of the work that had to be carried out to prosecute the proceeding (see Clothing & Allied Trades Union of Australia v Snuggleright Industries Pty Ltd (1990) 34 IR 124 at 126-127) or to demonstrate whether an order in a party’s favour under s 356 would not result in some unwarranted windfall being enjoyed by the party (see CPSU, The Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228 (‘Telstra’) at 233 [27]).  I would add that FSU adduced evidence on that issue and, on the basis of that evidence, I am satisfied that the order sought by FSU, namely that the penalties be paid to it, would not provide it with an unwarranted windfall.

64                  Although the policy embodied in s 347 makes it apparent that an order should not be made for the purpose of reimbursement, the words of s 356 do not provide any guidance on the intended purpose of conferring a power on the Court to make an order for payment of the penalty to an organisation or other prosecuting party.

65                  Section 356 and its predecessor, s 120 of the Conciliation and Arbitration Act 1904 (Cth), were said to be derived from the ‘common informer’ cases: see Schanka & Ors v Employment National (Administration) Pty Ltd (No 2) (2001) 114 FCR 379 at 404 (‘Schanka’).  A common informer has been described as ‘a private person suing for private benefit to recover a statutory penalty’: see Hawkesbury City Council v Foster & Anor (1997) 97 LGERA 12 at 14-15 and Schanka at 404.  In Finance Sector Union v Australian and New Zealand Banking Group Ltd [2002] FCA 1035, Wilcox J stated at [16]:

‘the rationale of the practice is that it tends to encourage a “common informer” to police the relevant legislation: see Vehicle Builders’ Employees’ Federation of Australia v General Motors-Holden Pty Ltd (1977) 32 FLR 100 at 113.  That rationale is likely to be defeated if the common informer is not allowed to make a profit.’

Making orders in favour of an organisation under s 356, or its predecessor, s 120 of the Conciliation and Arbitration Act 1904 (Cth), was also said to tend to encourage ‘the enforcement of awards’: see Electrical Trades Union of Australia v Sims Products Ltd (trading as Besco Batteries) (1988) 42 IR 250 at 254 per Gray J and Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 70 IR 284 at 287 per Marshall J.

66                  CBA disputed FSU’s reliance on ‘common informer’ cases in relation to s 356 but was not able to proffer a principle explaining why, in the usual course, a union should be deprived of the benefit of an order under the section .

67                  Under the WR Act, unions play a critical enforcement role in relation to the unlawful conduct of employers, such as the conduct of CBA in this case.  In that regard in Telstra, Finkelstein J observed at 233 [27]:

‘It cannot be doubted that employer and employee organisations play a legitimate and important role in seeing that there is compliance with the provisions of the Workplace Relations Act.  For example, an individual employee will rarely have the ability to fund a proceeding for a contravention.  If unions do not bring such proceedings, contraventions will go unpunished.’

68                  Similarly, in Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors (No 2) (2001) 110 IR 372, I stated, at 375:

‘where the conduct in question targets a particular organisation or person and that person is authorised to commence and commences a proceeding for the imposition of a penalty, in the usual course it is appropriate to order that the penalty be paid to the organisation or person.’

69                  In Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223 Gray J stated:

‘[t]he usual order, when [a] proceeding is not brought by an inspector appointed under the Act, is for payment to the person or organisation applying for the penalty.’ 

70                  In Telstra, Finkelstein J stated that perhaps the “usual” order described by Gray J at 233 [26]:

‘is to be explained on the basis that often an industrial organisation brings proceedings for a contravention of the Workplace Relations Act to protect the legitimate interests of its individual members.’

71                  In my view, there is nothing in s 356, its historical origins or the scheme of the WR Act that discloses any reason in the present case for departing from the ‘usual’ order that the penalty be paid to the FSU.  Even if the ‘usual order’ approach taken in the cases were not regarded as sound, I am satisfied that the role of unions under the WR Act and the extensive endeavours that were required to be undertaken by the FSU (acting in the interests of its members and the public) to bring, and then prosecute, the present proceeding to judgment, support the view that it is appropriate that the penalty be paid to the FSU.  Importantly, I am satisfied that the circumstances of the present case do not warrant denying FSU the order it seeks or apportioning the penalty between it and the Consolidated Revenue Fund.  Accordingly, I propose to order that the whole of the penalty by payable to FSU.

72                  Finally, I note that the penalties imposed in the present case, which total $750 000, greatly exceed penalties imposed under the WR Act or its predecessors in previous cases.  It may be that breaches by unions and employers of industrial legislation from time to time have been accepted as part of the give and take of industrial disputation.  However, in recent years industrial legislation has increasingly codified and prescribed what is acceptable, and what is unacceptable, industrial conduct.  The legislature has, over time, also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct.  In my view, any light handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable.  As is apparent from the penalties that I have imposed, I have not accepted that such an approach, which was urged by CBA (which contended that either no penalty or only a nominal penalty was appropriate), is applicable in the present case.

Associate:

Dated:              16 December 2005