3. The appellant is to pay in respect of the contraventions of s 341 and s 337 of the Workplaces Relations Act 1996 (Cth) a total penalty of $85,000.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 61 of 2008

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

HANSSEN PTY LTD

Appellant

AND:

ANDREW MARK JONES

Respondent

JUDGE:	SIOPIS J
DATE:	4 march 2009
PLACE:	PERTH

REASONS FOR JUDGMENT

1 The appellant is a Perth based construction company which carries on business building high rise apartments. Its sole director and secretary is Mr Gerardus Peter Hanssen. In 2006, the company employed approximately 20 persons, the majority of whom were foreign nationals holding a Subclass 457 work visa (a 457 visa). These employees worked as tradesmen.

2 In 2006, the appellant entered into an employment agreement, known under the Workplace Relations Act 1996 (Cth) (the Act) as an Australian Workplace Agreement (AWA), with each of a number of its employees who held a 457 visa. Later each of the AWAs was lodged with the Office of the Employment Advocate. This case is about the way in which those agreements were entered into and lodged.

3 By an application dated 12 September 2007, filed in the Federal Magistrates Court, the respondent, who is a workplace inspector appointed pursuant to s 167 of the Act, alleged that the appellant had contravened s 341 of the Act in respect of the AWAs entered into with 10 of these employees; and that the appellant had contravened s 337(1) and s 337(8) as well as s 337(2) and s 337(9) in respect of the AWAs entered into with another five of these employees. It was also alleged that the appellant had contravened s 342 of the Act by failing to lodge an approved AWA entered into with an employee, Mr Salazar, within 14 days of approval.

4 The respondent alleged that the contraventions of s 341 of the Act comprised the appellant lodging nine AWAs, each of which contained a date which did not reflect the date on which the employee had signed the AWA, and an AWA which did not contain any date reflecting the date of signature by the employee.

5 The respondent also alleged that the appellant had failed to take reasonable steps to ensure that each of the five different employees had had ready access to his AWA during the seven‑day period beginning seven days before the AWA was approved and so had contravened s 337(1) and s 337(8) of the Act. As to the contraventions of s 337(2) and s 337(9), the respondent alleged that the appellant had not taken reasonable steps to provide the five employees with an information statement containing information as to the contents of the proposed terms of the AWA at least seven days before the date of the approval of the AWA.

6 The respondent claimed declarations that the appellant had contravened the Act in the manner referred to above, and that the appellant should pay a civil penalty in respect of the contraventions.

7 At the first directions hearing on 15 October 2007, the appellant admitted the contraventions alleged and consented to the making of declarations. The Federal Magistrate, accordingly, made the declarations sought by the respondent.

8 The only issue before the Federal Magistrate at the hearing on 5 November 2007 was the penalty to be imposed in respect of the contraventions of the Act which the appellant had admitted. The Federal Magistrate imposed a penalty totalling $173,250 in respect of the contraventions of s 337 and s 341 referred to above. The appellant has appealed against this penalty. The Federal Magistrate also imposed a penalty of $750 in respect of the contravention of s 342 of the Act, but no appeal is brought against the imposition of that penalty.

BACKGROUND

9 As mentioned above, the appellant entered into an AWA with each of the 15 employees the subject of this appeal. Each of the agreements was in the same form. There was a place for the date to be inserted beneath the signature of each of the signatories to the agreement. There was also a space for the signature of a witness to be inserted.

10 On 20 June 2006, the appellant lodged 10 of the AWAs with the Office of the Employment Advocate. Each of these AWAs reflected that Mr Hanssen had signed the agreements on behalf of the company on either 13 June or 14 June 2006 and that the employee in question, other than Mr Merina, had signed the agreement on 21 June 2006. In respect of Mr Merina, the agreement when lodged did not contain a date. It is the lodgement of these 10 AWAs which constitute the basis of the allegation that the appellant contravened s 341 of the Act.

11 At the relevant time s 340(1) relevantly provided:

An AWA is approved if:

(a) the AWA is signed and dated by the employee and the employer; and

(b) those signatures are witnessed; and

(Original emphasis.)

12 Section 341 provided:

341(1)An employer contravenes this subsection if:

(a) the employer lodges a workplace agreement (other than a greenfields agreement); and

(b) the agreement has not been approved in accordance with section 340.

341(2)Subsection (1) is a civil remedy provision.

13 On 5 July 2006, the Office of Workplace Services (OWS) commenced an investigation into the conduct of the appellant regarding the approval and lodgement of these AWAs. This was because it was apparent that something was awry ‑ at least in respect of nine of the AWAs lodged on 20 June 2006, because the date of lodgement predated the date on which each of the employees had purportedly signed the agreement.

14 On 10 July 2006, the appellant lodged an AWA which recorded that it had been signed by an employee of the appellant, Mr Salazar on 22 June 2006. It is this circumstance that formed the basis for the alleged contravention of s 342 of the Act.

15 On 18 August 2006, the appellant entered into an AWA with Mr Frampton. On 24 August 2006, it entered into an AWA with Mr Hennessy and on 25 August 2006 it entered into an AWA with Mr Twomey. It had also entered into an AWA with Mr Orano on 13 June 2006. It was the circumstances surrounding the entry into the AWAs with each of these employees, as well as the agreement entered into with Mr Salazar, referred to above, that formed the basis of the allegations that the appellant had contravened s 337(8) and s 337(9) of the Act.

16 On 13 September 2006, Mr Hanssen was interviewed by officers of the OWS. A record of interview was made by Ms Ride, one of the officers of the OWS. During the course of this interview, Mr Hanssen admitted that either he or someone else on behalf of the appellant, and not the employee, had inserted the date, 21 June 2006, beneath the employee’s name in each of the nine AWAs. Mr Hanssen said that he had asked each of the employees to leave the space for the date blank, when they signed the AWA.

17 On 14 December 2006, another meeting took place between Mr Hanssen and officers of the OWS. A record of this interview was also made.

Decision of the Federal Magistrate

18 At the hearing on 5 November 2007, the Federal Magistrate was required only to determine the appropriate penalty for the admitted contraventions of the Act. The evidence before the Federal Magistrate comprised an affidavit of Mr Hanssen and an affidavit of the respondent. Among the documents annexed to the respondent’s affidavit were the records of the interviews between the officers of the OWS and Mr Hanssen on 13 September 2006 and 14 December 2006 respectively.

19 Among the relevant considerations that the Federal Magistrate took into account, in assessing the appropriate penalty in these circumstances, were:

· the circumstances of the conduct (including deliberate defiance or disregard of the Act);

· the relevant record of civil penalty contraventions;

· the consequences of the contravening conduct;

· whether the contraventions are distinct or arise from a single course of conduct;

· general and specific deterrence;

· cooperation with regulatory authorities;

· the contravener’s contrition;

· the size of the prescribed maximum penalty;

· the totality principle.

20 As to the circumstances of the conduct, the Federal Magistrate observed that the 15 employees affected by the contraventions were holders of 457 visas and were, therefore, vulnerable because their remaining in Australia depended, at least in part, on their maintaining good relations with their employer, who was their sponsor for migration purposes.

21 At [8]‑[9] of his reasons, the Federal Magistrate stated:

The [appellant] was aware of the employees’ vulnerability. Mr Hanssen, the director and secretary of the [appellant], acknowledged that the employees “would sign anything” because they “are frightened of…being sent back”. The Court has no difficulty in concluding that this was a vulnerable set of employees, that the [appellant], through its principal officer Mr Hanssen had knowledge of that, and that he exploited his perception of these employees as being malleable to the wishes of the [appellant].

The [appellant] obtained detailed legal advice which correctly set out the [appellant’s] obligations with respect to the entering into and lodgement of AWAs with the [appellant’s] employees. The legal advice obtained was not followed by the [appellant], at least in relation to the contraventions. (Footnote omitted.)

22 The Federal Magistrate went on to observe that in the case of nine of the contraventions of s 341, the appellant lodged AWAs on 20 June 2006 which were purportedly signed on 21 June 2006. The tenth AWA was undated.

23 At [10]–[11] of his reasons the Federal Magistrate stated:

The unapproved AWAs were lodged on 20 June 2006. They were purportedly dated by employees on 21 June 2006. Mr Hanssen admitted asking the employees not to date the AWAs, and that that was done because he intended to date them. Mr Hanssen did so because he was aware of the 7 day access requirement. The Court finds that he did this deliberately in circumstances where he knew that the documents might not accurately reflect whether or not the employees had been afforded the requisite 7 day access period.

Mr Hanssen sought to justify the conduct on the basis that it was common practice in the building industry not to date various documents. However much that might be the case in the building industry it cannot countenance such a practice in respect of statutory requirements, particularly where:

a) the [appellant] had taken specific legal advice about its obligations in the AWA approval process; and

b) Mr Hanssen admitted that the [appellant] “mucked around with the dates a bit” because it “thought we were breaching” the 7 day requirement. Moreover he regarded this as of little consequence.

(Footnotes omitted.)

24 The Federal Magistrate held that he should not take into account past civil penalty contraventions of the appellant that were contraventions of Acts other than the Workplace Relations Act.

25 The Federal Magistrate found that individual employees had been separately affected by the appellant’s contraventions and that the contraventions could not be treated as a single course of conduct.

26 As to the consequences of the contravening conduct, the Federal Magistrate said at [19] of his reasons:

Because the declarations are admissions of each of the contraventions and the elements thereof the consequences of the contravening conduct must be that:

a) the [appellant] lodged and attempted to have registered AWAs which had not been approved by employees in accordance with the provisions of the WR Act;

b) employees were not afforded the ready access to the AWAs to which they were entitled in the seven day access period prior to approval;

c) employees were not provided with information statements concerning the AWAs within the required seven day period prior to approval; and

d) one approved AWA was not lodged within the required time period after approval (it was lodged four days late).

27 The Federal Magistrate found that the consequences of the contravention of s 342 ‑ being the late lodgement of Mr Salazar’s AWA ‑ were minor. The Federal Magistrate then went on to observe at [21]‑[23] of his reasons:

The consequences of the conduct in para 19(a)‑(c) above are however far more serious. They strike at:

a) the essence of the scheme of the WR Act which provides for employees to be protected by having adequate time (or at least the time prescribed by the WR Act) to consider their AWAs, and to consider the information statements in relation to their AWAs; and

b) the trust invested in employers by the Parliament when providing for greater self‑regulation in the AWA approval process.

These consequences are therefore most serious. It is a matter of serious concern to the Court that the [appellant] seemed to regard them as being of little consequence. Further, the [appellant] endeavoured to argue that the scheme of self‑regulation was an excuse for its conduct, because of the complexity of the terms of the WR Act in relation to AWA approvals. This however ignores the following facts:

a) that the [appellant] received detailed legal advice concerning its obligations and the process for AWA approvals from its solicitors;

b) the conduct was not caused by the supposed complexity of the approval process for AWAs, but rather the deliberate conduct of the [appellant] (particularly as to the dating of the AWAs by Mr Hanssen) based on a perception of the employees’ malleability and alleged practices in the building industry.

The vulnerability of these particular employees only highlights the seriousness of the consequences of the contravening conduct.

28 The Federal Magistrate went on to note that both general and specific deterrence should be considered when imposing a penalty. At [26] of his reasons, the Federal Magistrate observed:

In this case because of the deliberateness of the [appellant’s] conduct, and the seriousness of the consequences of the conduct in respect of all but the contravention of s 342 of the WR Act, it is appropriate that the penalty reflect a greater level of specific deterrence than might ordinarily be the case.

29 The Federal Magistrate observed that amendments made in 2005 to the Act established a mandatory self‑compliance regime for employers entering AWAs with their employees. The appellant’s conduct, he said, was contrary to this regime. The Federal Magistrate went on to observe at [29]:

In this case the [appellant’s] contravening conduct is contrary to the objects of the WR Act, and did not reflect the [appellant’s] responsibility as an employer in a deregulated environment to conduct itself appropriately and comply with its statutory obligations. In assessing the seriousness of the [appellant’s] conduct, and what the level of penalty might be, the Court must have regard to the statutory purposes of the WR Act. One of the reasons why the conduct of the [appellant] is serious is that if it were left unchecked, it might undermine some of the statutory objects and purposes of the WR Act which the Court has set out above.

30 The Federal Magistrate also held that regard should be had to the financial capacity of the appellant and its ability to pay any penalty imposed. The appellant, said the Federal Magistrate, was a “largish Perth based construction company” and there was no evidence of an inability to pay the penalty suggested by the respondent.

31 The Federal Magistrate then dealt with the issue of cooperation with regulatory authorities. At [32]‑[34] of his reasons, the Federal Magistrate observed:

The [appellant] has cooperated with the Workplace Ombudsman (previously the office of Workplace Services) in its investigation.

The [appellant] also admitted the contraventions prior to the first directions hearing in the matter, thus further cooperating with the Workplace Ombudsman and saving considerable expenditure of resources by the Workplace Ombudsman and this Court.

Notwithstanding the Court’s findings as to the nature and circumstances of the conduct by the [appellant] it’s [sic] cooperation with the regulatory authorities and early admission of the contraventions entitles it to a substantial penalty reduction.

32 The Federal Magistrate stated that there was evidence of the contrition of the appellant in its cooperation with the regulatory authority, its early admission of contraventions and its adoption of “correct procedures with respect to the AWA approval process for subsequent AWAs entered into by employees”.

33 The Federal Magistrate also said that there was an expression of contrition on the appellant’s behalf by its counsel at the penalty hearing. However, the Federal Magistrate observed that there was no evidence on affidavit of the appellant’s contrition. The Federal Magistrate went on to observe that the appellant was entitled to a substantial discount because of the evidence of contrition, but not as substantial as would have been appropriate if there was further direct evidence of contrition.

34 As to the size of the prescribed penalty, the Federal Magistrate noted that the maximum penalty for breaches of s 337 and s 342 of the Act was $16,500 and the maximum penalty for a breach of s 341 was $33,000. At [39]‑[40] of his reasons the Federal Magistrate stated:

Having regard to the cooperation with regulatory authorities, and the early admission of the contraventions, the Court considers that the [appellant] is entitled to a penalty reduction in the range of 25‑30% for the cooperation and early admission. In relation to the evidence of contrition, and recognising there is a significant overlap between that and the issues of cooperation and the early admission, the Court considers that a further penalty reduction of 25‑30% is appropriate, but that penalty reduction must take account of the overlap. Therefore, considering these matters together, and taking account of the overlap, the Court considers that the [appellant] is entitled to a penalty reduction of 40‑50% for the combined elements of cooperation, early admission and contrition.

The [appellant] is also entitled to a penalty reduction of 20‑30% as a first time contravener.

35 The Federal Magistrate went on to observe at [41]‑[44]:

The Court has found that the contraventions were deliberate, and exploited vulnerable employees, and in that regard, it is appropriate to note that whilst both the contraventions of ss 337 and 341 are serious, neither is in the worst category of cases which might come before this Court. In those circumstances, the Court considers that a further penalty reduction of 5‑10% is appropriate.

In determining the final amount of penalty for the ss 337 and 341 contraventions the Court must take account, for the reasons expressed above, of the need for specific deterrence. Therefore, the penalty reductions will be at the lower end of the ranges of penalty indicated above.

The Court therefore concludes that the [appellant] is entitled to a penalty reduction of 65% on the maximum penalty for each of the contraventions of ss 337 and 341 of the WR Act.

Subject to the application of the totality principal the penalty for each of the breaches of:

a) s 337 will be $5,775.00, giving a total of $57,750.00 for the 10 separate contraventions of s 337; and

b) s 341 will be $11,550.00, giving a total of $115,500.00 for the 10 separate contraventions of s 341 of the WR Act.

36 The Federal Magistrate accepted that the contravention of s 342 was not serious and he imposed a penalty of $750.

37 The total penalty imposed for the 21 contraventions of the Act was $174,000.

38 In applying the totality principle, the Federal Magistrate adopted the approach of the majority of the Full Court in Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560 which he described as: “to consider by an approach of instinctive synthesis whether or not the penalty is appropriate”.

39 The Federal Magistrate went on to say at [50] of his reasons:

In the circumstances of this case, albeit that the ss 337 and 341 penalties are serious, it is nevertheless the case that this is a first time contravener (for present purposes) and the cases do not fall within the most serious category of cases. A fine of $173,250.00 is a substantial fine, but there are 20 admitted contraventions of ss 337 and 341. In the circumstances, the Court considers $173,250.00 an appropriate penalty.

The appeal

40 The appellant abandoned ground 2 of its amended notice of appeal and relied upon the following three grounds of appeal:

1. Having correctly determined that he should have regard to the consequences of the contravening conduct as a matter relevant to the assessment of penalty, the learned Magistrate erred in the exercise of his discretion by:

(a) (i) finding that the appellant engaged in conduct which:

(A) was deliberate; and

(B) exploited vulnerable employees,

when there was no, or no proper, basis for a finding that the appellant had:

(D) exploited any of the relevant employees,

and

(ii) relying on these erroneous findings in assessing penalty;

(b) failing to find, as he should have, that none of the relevant employees had suffered any disadvantage as a consequence of the appellant’s contravening conduct; and

(c) assessing penalty as if one or more of the relevant employees had suffered some disadvantage as a consequence of the appellant’s contravening conduct.

2. …

3. Having correctly determined that he should apply the totality principle in the assessment of penalty, the learned Magistrate erred in the exercise of his discretion in applying the totality principle, by failing to give any or any proper regard to the justness and appropriateness of the aggregate penalty, having regard to the overall conduct of the appellant and all of the circumstances of the case.

4. In the alternative, the learned Magistrate erred in the exercise of his discretion in that the aggregate of the penalties imposed were, in all of the circumstances of the case, manifestly excessive.

41 The first limb of this ground of appeal relates to the Federal Magistrate’s finding as to the deliberateness of the appellant’s conduct. In this regard, the appellant’s complaint was that the Federal Magistrate failed to distinguish between the conduct comprising the admitted contraventions of s 337 and the conduct comprising the contraventions of s 341 but applied his finding of deliberateness to all the contraventions.

42 The appellant contended that such findings of deliberateness that the Federal Magistrate made, were confined to the circumstances relating to the dating of the AWAs by the appellant. In other words, the finding was in relation to the contravention of s 341. There was, said the appellant, “no clear…finding” by the Federal Magistrate of deliberateness in relation to the circumstances of the appellant’s conduct comprising the contraventions of s 337.

43 The respondent, at paras 7‑11 of his written submissions, referred to a number of passages from the transcript of the interviews with Mr Hanssen and contended that there was sufficient evidence to support the finding of the Federal Magistrate.

44 There was no statement of agreed facts in this case. The Federal Magistrate’s findings in respect of the deliberateness of the appellant’s conduct were made in [9]‑[11] of his reasons (see [21]‑[23] above). In making his findings relating to the deliberateness of the appellant’s conduct, the Federal Magistrate relied upon statements made by Mr Hanssen in the course of his interviews with the OWS. At [11] of his reasons (see [23] above), the Federal Magistrate referred to Mr Hanssen as having admitted in the interviews to “mucking around” with the dates, and to thinking that the appellant was breaching “the 7 day requirement” of the Act.

45 The full extract of Mr Hanssen’s statement during the interview as to “mucking around” with dates is as follows:

Some brought them back the same day ‑ we mucked around with the dates a bit. I told them they had 7 days to think about it, but they didn’t have anything to think about. The one thing they are frightened of is being sent back. They are only too eager to please, they blend in with the workforce.

46 As to Mr Hanssen’s statement that he thought the appellant was “breaching” the Act, the full extract of Mr Hanssen’s statement is as follows:

Some came back within a day and that will be the problem with the dates ‑ we looked at the dates and thought we were breaching. I didn’t think it was a problem really.

47 It is apparent that in these extracts Mr Hanssen is referring to the circumstances which led to the dating of the AWAs by the appellant.

48 I observe, parenthetically, that Mr Hanssen does mention in one of the statements that he told the employees they had “seven days to think about it”. This statement, which on the face of it indicates that the appellant did take some steps to comply with s 337(1), may explain why the respondent did not allege that the appellant had breached s 337 in relation to the 10 employees who were the subject of the contraventions of s 341.

49 As already mentioned, the allegations of contraventions of s 341 of the Act related to 10 employees, whereas the respondent’s claims of contraventions of s 337 of the Act related to five different employees. In relation to the latter alleged contraventions, there was no allegation that the appellant inserted false dates. Accordingly, the statements made by Mr Hanssen explaining the circumstances of inserting false dates (which were referred to by the Federal Magistrate in support of his findings in [9]‑[11] of his reasons) are not germane to the alleged contraventions of s 337 of the Act, which as I have said, do not involve an allegation that there was the insertion of false dates.

50 The reasons of the Federal Magistrate do not describe the circumstances in which the appellant failed to comply with s 337 of the Act in respect of the five employees in question. Further, the Federal Magistrate did not make any findings as to the deliberateness or otherwise, of the conduct comprising the contraventions of s 337 of the Act. There is a general reference in the Federal Magistrate’s reasons to the failure to carry out legal advice but this is not related to any specific conduct by the appellant in relation to the five employees in question.

51 The Federal Magistrate did not err in his finding that the lodging by the appellant of the nine AWAs was part of a deliberate strategy of the appellant to create the impression that each of the employees in question had had access to the AWA for at least seven days after the employer had signed the AWA, whether or not that had been the case. The evidence which the Federal Magistrate referred to in his judgment, as well as the other passages of Mr Hanssen’s interviews referred to by the respondent in argument, more than adequately support the Federal Magistrate’s finding in respect of deliberateness in relation to the contraventions of s 341 of the Act.

52 However, in my view, the Federal Magistrate did err in transposing the finding of deliberateness in respect of the contraventions of s 341, to the contraventions of s 337 when considering the appropriate penalty. This was because the Federal Magistrate did not make any specific factual findings by reference to the evidence, as to the conduct comprising the contraventions of s 337.

53 As the appellant pointed out, there are passages from the interviews in which Mr Hanssen says that he took steps to try and ensure that the employees retained the AWAs for seven days before returning them but that he was not always successful in persuading the employees to retain the AWAs during that period. The essence of the contravention of s 337 is the failure of the employer to “take reasonable steps” to ensure that each employee is given an information statement and has ready access to the AWA during the prescribed period. The Federal Magistrate’s reasons do not identify the circumstances of the omissions and why those omissions were to be characterised as “deliberate” conduct.

54 As to the second limb of this ground of appeal, the appellant’s contention is that the Federal Magistrate erred in finding that the appellant had exploited the vulnerability of the employees, and in failing to find that none of the employees suffered any material disadvantage.

55 The appellant accepted that the employees were, by reason of their immigration status, vulnerable to exploitation. However, said the appellant, there was no evidence that the terms of the AWAs which the appellant had entered into with each of the employees was harsh or unfair. Nor, said the appellant, had the respondent so contended at the hearing. There was, said the appellant, no evidence to support a finding that the appellant had exploited the vulnerability of the employees.

56 It is apparent from his reasons [see [35] above], that the Federal Magistrate applied the finding that there had been an exploitation of the vulnerable employees in determining the appropriate penalty in respect of the contraventions both of s 337 and s 341. The difficulty with the Federal Magistrate’s approach is that he did not make explicit findings as to the manner in which Mr Hanssen had exploited the vulnerability of the employees affected by the contraventions of s 337 or those employees the subject of the contraventions of s 341.

57 The primary finding of the Federal Magistrate in respect of the exploitation of the vulnerability of the employees is found at [8] of his reasons (see [20]‑[21] above). There, the Federal Magistrate referred to the fact that Mr Hanssen said in his interview that the employees would “sign anything”. The Federal Magistrate then went on to find that Mr Hanssen knew that the employees were vulnerable and that he “exploited his perception of these employees as being malleable to the wishes” of the appellant. However, as already mentioned, the Federal Magistrate did not go on to make specific findings as to the form that the exploitation took. Nor did he refer to the detriment suffered by the employees by reason of the exploitation by the appellant.

58 The finding of exploitation appears to be based on Mr Hanssen’s statement that the employees would “sign anything”. The evidence of Mr Hanssen that the employees would “sign anything” supports the finding of the Federal Magistrate that Mr Hanssen knew the employees were vulnerable. It does not support the finding that because they were willing to “sign anything” the appellant exploited that willingness to the disadvantage of the employees.

59 In my view, in making a finding that there was exploitation by the appellant of vulnerable workers, and in treating that finding as an adverse circumstance affecting penalty, it was incumbent upon the Federal Magistrate to make specific findings in relation to the detrimental impact, if any, on the employees affected. This is because that finding and the treatment of that finding as an adverse factor, carried the implication that there had been such a detrimental effect. In any event, for the reasons expressed below, it was a relevant consideration in relation to any finding that there was exploitation of the employees’ vulnerability.

60 In my view, the Federal Magistrate erred in failing to recognise that there was no evidence that the contraventions had led to the employees entering into AWAs which were disadvantageous when compared to AWAs entered into by other employees. The Parliamentary intention behind this part of the Act is to prescribe a process which gives an employee enough time to consider the terms of the proposed AWA and, thereby, prevent the situation from arising where the employee is pressured to enter into an unfair contract because of an unfair process. In other words, the objective of the process is to preclude, so far as possible, an employer from exploiting the ignorance of an employee as to the terms of a proposed AWA, to pressure or cajole that employee into entering into an unfair contract. In considering the penalty, it was relevant to consider whether the conduct comprising the contraventions amounted to the very mischief to which the Act was directed.

61 The respondent contended that the Federal Magistrate did not err in taking into account the exploitation of the vulnerability of the employees as a factor adverse to the appellant, because the appellant was incorrectly focusing on the indirect consequences of the contraventions of the Act. The detriment to the employees, said the respondent, flowed directly from the breach, namely, the employees did not receive the statutory benefits. In my view, this fact alone would not justify the Federal Magistrate treating “the exploitation of the vulnerability” of the employees as a specific adverse factor. The detriment identified in the respondent’s submissions, namely, the denial of the statutory benefits, was no greater than, and of no different a character from that suffered by any non‑vulnerable employee who had been denied the statutory benefits provided for under s 337 or s 341. In this case, there does not appear to have been any other additional material detriment suffered by these employees by reason of their vulnerability than would otherwise have been the case.

62 In my view, the appellant is correct in its submission that the Federal Magistrate placed too much emphasis on the mere fact of the vulnerability of the employees, rather than articulating the actual detriment suffered by the employees beyond the denial of the statutory benefits.

63 I, accordingly, uphold this ground of appeal.

The third and fourth grounds of appeal

64 It follows from my findings that the penalty was imposed on an erroneous basis. Because these findings undermine important findings of the Federal Magistrate on which the penalty was based, it follows that grounds three and four of the appeal should also be upheld.

The notice of contention

65 The respondent filed a notice of contention which relied upon five grounds of contention. In each ground, the respondent contended that the Federal Magistrate had erred. However, the respondent did not ask the Court to increase the penalty because of these alleged errors, but submitted that these contentions constituted a basis for the Court not to reduce the penalty.

The first ground of contention

66 The first contention made was that the Federal Magistrate erred in finding that the appellant was contrite. The Federal Magistrate applied a discount of 25%‑30% on the basis of the appellant’s contrition. The Federal Magistrate said that the finding of contrition was based on the appellant’s cooperation with authorities, its early admission, its expression of contrition and its subsequent compliance with the Act.

67 First, the respondent submitted that the appellant’s admissions should not be regarded as indicative of contrition, because they amounted to nothing more than the recognition by the appellant that there was an overwhelming case against it. The respondent said that the transcript of Mr Hanssen’s first interview showed that he had initially maintained that the AWAs had been signed by the employees on 21 June 2006; and that it was only after Mr Hanssen appreciated the inconsistency of the date of signature post‑dating the date of lodgement, that he admitted that the AWAs had been dated by him and not the employee in question.

68 I accept the submission of the appellant that some caution must be exercised in drawing conclusions from the transcript of the interviews. This is so because it is clear that the transcripts are not verbatim transcripts of the interviews; and it also appears that Mr Hanssen’s command of English is less than perfect. Nevertheless, there is, in my view, substance in the contention made by the respondent that the transcript appears to show that at the commencement of the first interview, Mr Hanssen did maintain that the AWAs had been signed by the employees on 21 June 2006, and that it was only after he appreciated that he had inserted a date which post‑dated the date of lodgement, that he acknowledged that he had dated the AWAs. However, the interview transcript also indicates that, after what may be referred to as a false start, Mr Hanssen cooperated fully with the authorities. The Federal Magistrate does not refer to this matter in discussing contrition. He may have considered that the false start was an irrelevant consideration in considering contrition in light of the subsequent cooperation. In my view, the discount for contrition should have reflected this circumstance and in failing to do so, the Federal Magistrate erred. I do not accept, however, the consequence is that there should be no discount for contrition.

69 The respondent also contended that the manner in which the appellant’s counsel had conducted the hearing before the Federal Magistrate demonstrated an absence of genuine remorse. The respondent said that at the hearing the appellant’s counsel had challenged the respondent’s submission that Mr Hanssen’s statements made in the interviews were admissions of “deliberate falsification” and also that Mr Hanssen regarded the false dating as inconsequential. It was said that the appellant’s counsel had sought to downplay the seriousness of the appellant’s conduct by characterising the breaches of s 341 of the Act as “technical breaches”, and by submitting that none of the employees had suffered a disadvantage.

70 In my view, the Federal Magistrate was best placed to determine whether the conduct of the case by the appellant’s counsel was such as to demonstrate a lack of contrition by Mr Hanssen. The Federal Magistrate did not come to that view. I am not satisfied that the Federal Magistrate erred in that approach.

71 It is the case that the appellant’s counsel at the hearing before the Federal Magistrate made submissions that challenged the respondent’s submissions as to the characterisation of Mr Hanssen’s conduct. From the transcript, it appears that counsel for the appellant construed the respondent’s submissions to be a submission that Mr Hanssen had acted fraudulently. The appellant’s counsel sought to resist that submission. It appears that among the points that the appellant’s counsel sought to make was that the appellant had not been charged with any fraudulent conduct, and that in dating the AWAs, Mr Hanssen had not thought that he was doing anything wrong because it was common practice in the industry to post‑date documents. Although such a view on Mr Hanssen’s part is seriously misguided, it was a submission that was open to the appellant’s counsel to make, and it is not inconsistent with a capacity on Mr Hanssen’s part subsequently to demonstrate contrition.

72 Further, in referring to the breaches of s 341 as “technical”, the appellant’s counsel appeared to be contrasting the position of failing to comply with a formal requirement of the Act, namely, the accurate reflection of the date of the employee’s signature, on the one hand; with the statutory purpose of this part of the Act, namely, the protection of employees from the imposition by stealth of unfair and oppressive terms, on the other hand. In my view, this was a distinction which was relevant and the appellant, through its counsel, was entitled to point out that there was no evidence that the employees had suffered any material disadvantage by reason of the contraventions of the Act.

73 As already mentioned, the Federal Magistrate was in the best position to judge whether the conduct of the case by the appellant’s counsel was such as to demonstrate a lack of contrition by Mr Hanssen and the appellant.

74 Next, the respondent contended that further evidence of the absence of contrition was to be found in the fact that Mr Hanssen had failed to give evidence of the actual contrition at the hearing, despite having had an opportunity to do so.

75 The Federal Magistrate was fully aware of the circumstances surrounding the question of Mr Hanssen personally expressing contrition on behalf of the appellant. He dealt with the issue at [36] and [37] of his reasons. The Federal Magistrate correctly recognised the absence of evidence of contrition and the limitations on the expressions of contrition which had been made to the court through counsel, and accorded that form of the expression of contrition appropriate weight. He correctly held that the appellant was not entitled to as much discount as it would have been entitled to had there been “further direct evidence of contrition”. In my view, the Federal Magistrate did not err.

76 Further, I do not accept the respondent’s contention that further evidence of the appellant’s lack of contrition is to be found in the challenge in this appeal to the Federal Magistrate’s findings of deliberateness of the appellant’s conduct. For the reasons which I have already given, there was substance in the appellant’s challenge.

77 The respondent also submitted that the appellant’s subsequent compliance with the Act did not necessarily demonstrate genuine remorse. It was submitted that it was more likely to reflect a “pragmatic recognition” that it was not worth continuing to breach the Act.

78 There was evidence that subsequent to Mr Hanssen’s interviews, the appellant had admitted the contraventions and had cooperated with the authorities. The respondent did not point to any evidence before the Federal Magistrate that there were continuing failures by the appellant to comply with the Act. In my view, it was open to the Federal Magistrate to find that the appellant’s subsequent compliance with the Act was evidence of contrition. Indeed, it appears that the respondent accepted this in his submissions before the Federal Magistrate.

79 It follows that I partially uphold this ground of contention. The question is the extent to which the discount of 25%‑30% which the Federal Magistrate determined, should be varied. Once Mr Hanssen abandoned his initial stance, which was only a short way into the first interview, he was very frank and forthcoming. His cooperation with the authorities commenced at a very early stage of the process – well before the commencement of any legal proceedings. In my view, Mr Hanssen’s conduct following his initial stance, should be construed as indicative of an acceptance of responsibility rather than the mere recognition of an overwhelming case. In my view, a reduction in the discount to a range of 20%‑25% properly reflects Mr Hanssen’s initial stance in the first interview of seeking to assert the truth of the contents of the documents.

The second ground of contention

80 The second ground relied upon in the notice of contention was an alternative ground to the first ground. It was expressed as follows:

[T]he learned Magistrate erred in giving a substantial discount for contrition (based on cooperation, early admissions and subsequent compliance) in addition to the discount for the cooperation and early admissions.

81 The Federal Magistrate found at [39] of his reasons that the appellant was entitled to a discount in the range of 25%‑30% for cooperation and early admission and a discount of 25%‑30% for contrition. However, the Federal Magistrate recognised that there was a “significant overlap” between contrition and “the issues of cooperation and the early admission”. Therefore, said the Federal Magistrate, considering these matters together, and taking account of the overlap, the appellant was “entitled to a penalty reduction of 40%‑50% for the combined elements of cooperation, early admission and contrition”.

82 The respondent noted that this assessment of a 40%‑ 50% reduction by the Federal Magistrate represented an increase of 15% to the lower end of the range of 25%‑ 30% which he had assessed for cooperation and early admission. The respondent then noted the Federal Magistrate had said at [35] of his reasons, that the contrition was based on evidence of cooperation, early admission and subsequent compliance. It followed, contended the respondent, that the additional 15% expressed in the composite percentage reduction was to be attributed to no more than the subsequent compliance with the Act. This, said the respondent, was too generous a reduction and the Federal Magistrate had, therefore, erred.

83 In my view, the Federal Magistrate did not err in his approach to setting a discount which took account of contrition, cooperation and early admission at 40%‑ 50%. First, the setting of a discount is not a precise science and on the analysis conducted by the Federal Magistrate, which recognised the overlap, it was open to him to come to the percentage discount to which he came. Secondly, the analysis relied upon by the respondent, which attributes the entire additional 15% increase for contrition to subsequent compliance, fails to recognise that the Federal Magistrate also included as an element of contrition, the fact that the appellant had expressed contrition to the court by its counsel.

84 I, accordingly, dismiss this contention. However, the consequence of my finding in relation to the first ground of contention would mean that the combined discount would be in the range of 35%‑ 45%.

The third ground of contention

85 The third ground of contention was in the alternative to the first two grounds. The respondent contended that the Federal Magistrate erred in giving a discount of 40%‑ 50% for cooperation, early admission and contrition. This level, said the respondent, was too high because the appellant was not remorseful and the admission reflected recognition of an overwhelming case. The respondent referred to the case of Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 (Mornington Inn) where the Court allowed a discount of 10% for an admission which reflected only the recognition of an overwhelming case.

86 In my view, this contention reflects the tenor of the contentions made by the respondent in relation to the first two grounds of contention. The same reasoning as I have set out above in relation to those grounds applies to this ground.

87 Further, the facts of this case are distinguishable from those in Mornington Inn. In Mornington Inn, the case had been contested on the pleadings and the admission had only occurred after monies were spent in preparation for trial. In this case, there was cooperation at a very early stage. This was not a case where the appellant had contested the matter on the pleadings and the respondent was required to spend a considerable amount of public monies in getting the case ready for trial.

The fourth ground of contention

88 The fourth ground of contention was that the Federal Magistrate failed to have proper or any regard to the need for general deterrence. In my view, this contention is to be rejected. Whilst it may be the fact that the Federal Magistrate only referred to specific deterrence at that part of his reasons when assessing the question of the extent of the discount, the Federal Magistrate’s reasons, taken as a whole, reflect that he had regard to both general, as well as specific, deterrence. This is evident from the Federal Magistrate’s specific reference to general deterrence at [6(e)] of his reasons and his observations as to the importance to be placed on ensuring that employers give effect to the policy of self‑regulation which underlies this part of the Act which permeate his reasons.

The fifth ground of contention

89 The fifth ground of contention was that the Federal Magistrate erred in determining that the contraventions of s 341 of the Act were not in the worst category of cases. The respondent contended that for the following reasons the Federal Magistrate should have found that the contraventions were very serious:

(a) the conduct involved deliberately falsifying nine AWAs in a manner which would conceal a failure to comply with the legislative requirements;

(b) the appellant deliberately breached the trust reposed in employers by the legislation, which provides for greater self‑regulation in the AWA approval process;

(d) the contraventions occurred in circumstances where the appellant was aware of its obligations under the Act having obtained legal advice;

(e) the appellant regarded the conduct as of no consequence; and

(f) the conduct involved the AWAs of 10 employees.

90 In my view, the Federal Magistrate did not err in concluding that the contraventions did not fall into the worst category of cases.

91 As to the contention that the Federal Magistrate should have taken into account that Mr Hanssen deliberately inserted false dates for the purpose of concealing the appellant’s failure to comply with the Act (presumably s 337(1)) in respect of the nine employees, that submission cannot be accepted. The respondent never charged the appellant with having contravened s 337(1) of the Act in respect of any of the nine relevant employees. The essence of the offence arising from s 337(1) and s 337(8) is the failure to take reasonable steps to give an employee access to the AWA during the prescribed period. The Federal Magistrate never considered and never made primary findings on whether the appellant had failed to take reasonable steps to give the nine employees access to the AWAs. There was no need to do so. In any event, such evidence as there was on the question of whether the appellant had taken reasonable steps to give those employees access to the AWAs was ambiguous ‑ see, for example, the comments made by Mr Hanssen as to asking the employees to keep their AWAs for seven days, set out at [45] above. This ambiguity in the evidence was presumably one reason why the respondent did not allege contraventions of s 337(1) and s 337(8) by the appellant in respect of the nine employees.

92 As I have previously found the Federal Magistrate did not err in finding that the appellant engaged in deliberate conduct to create the impression that each of the nine employees had had access to the AWA for at least seven days, whether or not this was the case. This is a finding that the appellant engaged in deceptive conduct, but it does not amount to a finding that the conduct was directed to concealing an actual failure to comply with the Act. It is the case that Mr Hanssen said at one time during an interview that he thought the appellant may be breaching the Act, but this did not justify imposing a penalty on the basis that the insertion of the date was intended to conceal an actual breach of s 337(1) and s 337(8) of the Act.

93 As to the remaining factors referred to by the respondent, the Federal Magistrate took these factors into account in reaching his view that the conduct did not amount to the worst category of cases. I have already found that, insofar as the Federal Magistrate took into account against the appellant that there had been exploitation of the vulnerability of the employees, the Federal Magistrate erred. This error would, of course, affect the Federal Magistrate’s finding as to whether the appellant’s conduct was in the worst category of cases. It also undermines the respondent’s contention that this was a factor which should have caused the Federal Magistrate to find that the conduct was very serious. It follows that the respondent’s contention that the Federal Magistrate erred in failing to find that the contraventions of s 341 were in the worst category of cases because they were very serious, is dismissed.

94 Further, in my view, the observations that Mr Hanssen made during his interviews that the contravening conduct was “of no consequence” should be interpreted in its proper context. As previously mentioned, it appears there are limitations on Mr Hanssen’s ability to express himself in English. It is entirely possible and, in my view, likely that in referring to the absence of “consequence”, Mr Hanssen was trying to make the point that by permitting him to date the contracts, the employees were acting in accordance with common practice in the building industry, and that in doing so, they had suffered no adverse consequences because the terms of the contracts were not unfair.

95 In my view, a distinction should be drawn between the contraventions of s 341 and s 337 in setting the appropriate discount on the basis of the seriousness of the contraventions. This is to reflect the finding of Mr Hanssen’s deliberate intent to misrepresent that the employees had had access to the AWAs for seven days, regardless as to whether this was the true position. It is this element of the contravention, rather than any detriment suffered by the employees in not dating their own contracts, which makes this contravention more serious. This is because, as the Federal Magistrate found, it undermines the self‑regulation policy of the Act. As the Federal Magistrate said, the appellant’s conduct was not justified because there was a practice of permitting the other party to a contract to date contracts in the building industry. The post‑dating of the AWAs in this case was different because it sought to foreclose an inquiry as to whether the appellant had taken reasonable steps to give the employees access to their AWAs for the requisite period.

96 In my view, the discount in respect of the seriousness of the contravention should be 10% in respect of the contraventions of s 341 and 20% in respect of the contraventions of s 337.

The appropriate penalty

97 In my view, in determining the appropriate penalty, it is necessary to have regard to each class of contraventions separately.

98 I deal first with the contraventions of s 337 of the Act. The maximum penalty prescribed by the Act for a contravention of s 337 is $16,500. The discount available to be applied to the contraventions of this section, based on the unchallenged findings of the Federal Magistrate and the considerations set out above, is 70%‑95%. In my view, without the findings of deliberate conduct and exploitation of vulnerable employees, two major elements of the rationale used by the Federal Magistrate for setting the penalty at the lower end of the discount range are absent. In my view, it is appropriate to apply a discount of 90%. Accordingly, the total penalty payable in respect of the 10 contraventions of s 337, would be $16,500.

99 As to the contraventions of s 341, the maximum penalty for a contravention of that section is $33,000. Based on the unchallenged findings of the Federal Magistrate and the considerations referred to above, the discount available to be applied to contraventions of this section is 65%‑85%. However, in respect of these contraventions I have upheld the Federal Magistrate’s finding that the appellant engaged in a deliberate course of conduct to misrepresent the date of the signing of the AWAs. This was to foreclose any inquiry as to whether the appellant had complied with s 337(1) of the Act. As previously stated, conduct of this nature undermines the policy and operation of the Act. The penalty should reflect both specific and general deterrence. One of the major considerations that the Federal Magistrate took into account in applying the discount at the lower end of the range was that there had been exploitation of vulnerable employees. I have held that he erred in doing so. In my view, the appropriate discount to be applied is 75%. The total penalty in respect of 10 contraventions of s 341 would, therefore, be $82,500.

100 It remains to apply the totality principle. The total penalty in respect of all the contraventions of s 337 and s 341 would be $99,000. As previously mentioned, the one aggravating factor about the appellant’s conduct is the fact that the appellant by Mr Hanssen engaged in a deliberate stratagem to foreclose an inquiry as to whether it had complied with s 337(1) and s 337(8) of the Act. However, there is no evidence that the appellant engaged in conduct of this nature for a concerted period of time and there is no evidence that the employees were materially disadvantaged. In my view, on the application of the totality principle, the appropriate penalty for the contraventions of s 337 and s 341 would be $85,000.

101 It follows that the appeal is allowed and the orders of the Federal Magistrate are varied to substitute the penalty of $173,250 payable in respect of the contraventions of s 341 and s 337 of the Act with a penalty of $85,000.

102 As I have previously mentioned, there was no appeal in respect of the penalty of $750 imposed by the Federal Magistrate in respect of the contravention of s 342 of the Act.

I certify that the preceding one hundred and two (102) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Associate:

Dated: 4 March 2009

Counsel for the Appellant:	Mr AJ Power

Solicitor for the Appellant:	Jackson McDonald

Counsel for the Respondent:	Ms GA Archer SC

Solicitor for the Respondent:	Clayton Utz

Date of Hearing:	29 July 2008

Date of Judgment:	4 March 2009

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