FEDERAL COURT OF AUSTRALIA

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (known as The Australian Manufacturing Workers’ Union (AMWU)) v Sunstate Coatings Pty Ltd (No 2) [2011] FCA 391

THE COURT ORDERS AND DECLARES THAT:

1.    On 24 August 2010, the first respondent threatened to take action against Henry Daamen with intent to coerce him to engage in industrial activity in contravention of s 348 of the Fair Work Act.

2.    On 18 October 2010, the first respondent threatened to take action against Henry Daamen with intent to coerce him to engage in industrial activity in contravention of s 348 of the Fair Work Act.

3.    On 21 October 2010, the first respondent induced Henry Daamen to take membership action in contravention of s 350(1) of the Fair Work Act.

4.    On or about 21 November 2010, the first respondent subjected Tony Jones to adverse action because he was a member of an industrial association in contravention of s 346 of the Fair Work Act.

5.    The first respondent pay a pecuniary penalty of $45,000 for its contravention of ss 346, 348 and 350(1) of the Fair Work Act.

6.    This pecuniary penalty of $45,000 be paid to the applicant.

7.    There be a stay of execution on order number 5 for a period of 28 days.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    The parties to these proceedings have settled them and they have jointly proposed that the Court make four declarations that the first respondent has breached the Fair Work Act 2009 (Cth) (“the Fair Work Act”), and an order imposing a total penalty of $45,000 on the first respondent in relation to those four breaches. It follows that my task is to consider whether I should make the declarations the parties have consented to and impose the penalty that the parties have agreed should be imposed. I do not consider it is necessary to set out the factual background to this matter. The agreed facts sufficiently define the factual background: see exhibit 1.

2    On the first question, in Australian Competition and Consumer Commission v E-Direct Pty Ltd [2008] FCA 65 (“E-Direct”) (at [21]–[24]), I set out what I considered to be the principles applicable to an application which is consented to by both parties that the Court make certain declarations; that is, what are sometimes referred to as consent declarations. While that decision dealt with proceedings under the Trade Practices Act 1974 (Cth), as it then was, I consider the principles I outlined are apt for the present proceedings.

3    In summary, those principles are these. First, there is little doubt that the Court has a wide discretionary power to make declarations of right under s 21 of the Federal Court of Australia Act 1976 (Cth). Secondly, the Court should be slow to discourage settlements by refusing to give effect to the terms of settlements made by the parties where the proposed orders are within the Court’s jurisdiction and appropriate. Thirdly, when the Court is asked to make declarations of right by consent, it is required to scrutinise the orders sought to satisfy itself that it has the power to make those orders and that they are appropriate.

4    That means that the Court has to ensure, among other things: that the declarations sought are directed to determining a legal controversy and not to answering abstract or hypothetical questions; that the party seeking the declaration has a real interest in seeking that relief, and that there are sufficient consequences flowing from the making of the declaration that it is appropriate for it to exercise its discretion to do so. Finally, in E-Direct, I noted the long held view that a declaration, being a judicial act, should only be made on evidence and not simply on admissions, or deemed admissions.

5    I will now turn to apply those principles to the present matter. First, I note that this settlement was achieved on the morning of the first day of a three day trial and followed a mediation that I ordered the parties to participate in. In preparing for this trial I read the pleadings and each of the affidavits filed by the parties, approximately 30 in all. Having done so, I am satisfied of a number of things. First, I have no doubt that there was a real legal controversy between the parties. Secondly, I am satisfied that there is a more than sufficient evidentiary basis for the declarations I am being asked to make. In particular, the affidavits disclose the nature and circumstances of the four breaches concerned. Furthermore, I have been provided with a statement of agreed facts, exhibit 1, prepared by the parties, which reflects much of the content of the affidavits I have read.

6    Thirdly, I have considered the various provisions of the Fair Work Act which are admitted to have been breached and the relevant penalty provisions. Without detailing those, I am satisfied I have the power under the Fair Work Act, combined with s 21 of the Federal Court of Australia Act, to make the declarations sought. I am also satisfied that the applicant, which I will refer to by the acronym AMWU, has a real interest in seeking the declarations. It is a registered organisation of employees under the provisions of the Fair Work (Registered Organisations) Act 2009 (Cth). Finally, I am also satisfied that there are sufficient consequences flowing from the making of the declarations. I include in that the public interest in making the declarations sought to mark the Court’s disapproval of the conduct of the first respondent in breaching the Fair Work Act.

7    Turning then to the second question: whether the agreed penalty is appropriate in the circumstances? The principles relating to the assessment of an appropriate penalty in these circumstances were summarised by Kenny J in White v CFMEU [2011] FCA 192 at [5]. In providing that summary, her Honour relied upon the Full Court’s decision in Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 694. Those principles overlap, to some extent, with the principles I have already mentioned in relation to the Court being asked to make consent declarations.

8    They include these. First, it is the responsibility of the Court to determine the appropriate penalty. Secondly, determining the appropriate penalty is not an exact science. Thirdly, within a permissible range, courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another. Fourthly, there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Fifthly, in determining whether the proposed penalty is appropriate, the Court examines all of the circumstances of the case.

9    And, finally, where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure, in the Court’s view, is appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range. Kenny J added (at [6]) this comment:

However, as Buchanan J noted in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 580, “At the end of the day, the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.”

10    These principles then provide general guidance to me in assessing whether the proposed penalty in this case is appropriate. As well as these principles, I have considered the oral and written submissions made by both counsel. Those submissions are detailed and have been quite helpful. I will not list every consideration identified by counsel, but I do consider the following matters are of particular importance in assessing the appropriate penalty in this case.

11    First, the circumstances of the breaches. The conduct involving the breaches occurred over approximately four months. It was therefore not an isolated incident. It involved two separate employees of the first respondent, Mr Daamen and Mr Jones. It was deliberate and it involved the senior management of the first respondent. By its nature, the conduct involved a serious breach of the coercion, inducement and adverse action provisions of the Fair Work Act. It had a significant effect on the health of Mr Daamen, and Mr Jones’ employment with the first respondent was terminated at the time. I take into account all these matters in assessing whether the proposed penalty of $45,000 is appropriate.

12    Secondly, there is the maximum penalty provided for these kinds of breach. By a combination of ss 539(2) and 546(2)(b) of the Fair Work Act and s 4AA of the Crimes Act 1914 (Cth), the maximum penalty in this case for each breach, if the person concerned is a body corporate, is $33,000. The proposed penalty equates to approximately $11,000 per breach, which is about one-third of this maximum penalty.

13    Thirdly, there is a number of matters peculiar to the first respondent that I consider would go to an amelioration of any penalty to be imposed. They include these. To begin with, it has offered a public apology to Mr Daamen and Mr Jones for its conduct and the hurt and offence it has caused. It has also agreed to pay Mr Jones the sum of $3,000 in addition to his redundancy entitlements, and offered Mr Daamen permanent full time employment with a related company. I therefore consider it has demonstrated remorse for its actions and sought to offer some reparation for the harm it caused.

14    Next, it has agreed to settle these proceedings in the way I have indicated. While that settlement occurred on the morning of the first day of the trial, it still has some utility. It has avoided the necessity to put Mr Daamen, Mr Jones, and many others through the stress of giving evidence at trial, and it has meant that there has been some saving of the Court’s resources. Finally, the first respondent has committed no other breaches of a similar kind. Added to that is the fact that the first respondent no longer trades and will soon be wound up.

15    These latter two factors effectively remove the usual personal deterrence and rehabilitation components from the assessment of the appropriate penalty in this case. They leave general deterrence as the main penalty consideration. I have already mentioned that I consider that general deterrence is an important factor in this case, to reinforce to all employers and to the general public that this sort of conduct is unacceptable and must be denounced.

16    I come then to the penalty range. I have been provided with a schedule showing the range of penalties that have been applied for the same, or similar, breaches under the Fair Work Act or its predecessor, or under similar legislation: see exhibit 2. That schedule shows that the range of penalties for an individual breach by a union, or an employer company, is between $6,000 a breach by a union in 2000, and as much as $298,000 a breach by an employer company in 2010. Most of the recent penalties broadly fall within the range of $15,000 to $25,000 per breach, when they involve a corporation, or an industrial organisation. However, Mr Reidy, for the AMWU, has pointed out that most of the cases in the schedule were coercion cases under the Building and Construction Industry Improvement Act 2005 (Cth) where the maximum penalty is higher for a grade A breach involving a corporation. In such cases, the maximum penalty under that Act is $110,000 per breach. As I noted, the maximum penalty under this Act for these breaches is less than one third of that, at $33,000.

17    I also note that the parties have agreed that the single course of conduct provisions of s 557 of the Fair Work Act are not applicable in this case. Given that the four breaches variously involved different provisions of the Fair Work Act, two different employees, and different events over a four month period, I agree with that conclusion.

18    So, summing up all these considerations, I look to the proposed penalty representing approximately $11,000 per breach. I note that the parties have asked me to view that as a global penalty of $45,000 for the offending as a whole. While I may have imposed a somewhat higher penalty in this case, taking into account all of the circumstances of the case that I have mentioned, I do not consider the proposed penalty is so out of kilter with the range of penalties, demonstrated by exhibit 2, that I should reject the penalty figure that has been agreed between the parties. For these reasons, I propose to make the declaration sought and to impose the penalty on the first respondent that has been agreed between the parties.

19    There is one other matter I need to deal with. The AMWU has sought an order under s 546(3) of the Fair Work Act that the penalty be paid to it. That order is not opposed by the first respondent. The AMWU has expended a great deal of effort and expense in pursuing these proceedings and I consider that such an order is, in those circumstances, appropriate.

Associate:

Dated:    21 April 2011