FEDERAL COURT OF AUSTRALIA

Transport Workers’ Union of Australia, NSW Branch v No Fuss Liquid Waste Pty Limited [2011] FCA 982

THE COURT ORDERS THAT:

1.    Pursuant to s 546 of the Fair Work Act 2009 (Cth) a penalty in the amount of $10,000 be imposed upon the First Respondent.

2.    Pursuant to s 546 of the Fair Work Act 2009 (Cth) a penalty in the amount of $2,250 be imposed upon the Second Respondent.

3.    Pursuant to s 546(3)(b) of the Fair Work Act 2009 (Cth) the penalties imposed pursuant to Orders 1 and 2 are to be paid to the Applicant.

4.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Scott Lansdown.

5.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Ken Morison.

6.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Ben Paiti.

7.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $5,001.00 to Mr Jacob Hurinov.

8.    The amounts of compensation ordered to be paid pursuant to Orders 4 to 7 inclusive are to be paid in accordance with an agreement between the parties and are in full and final satisfaction of all claims as against the First and/or Second Respondent.

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

REASONS FOR JUDGMENT

1    On 22 October 2010 there was filed in this Court a “Claim under the Fair Work Act 2009 alleging dismissal in contravention of a general protection”. Orders are sought pursuant to ss 545 and 546 of the Fair Work Act 2009 (Cth).

2    The Applicant in the proceeding is the Transport Workers’ Union of Australia (New South Wales Branch) (“Transport Workers’ Union”).

3    The First Respondent, No Fuss Liquid Waste Pty Limited (“No Fuss Liquid”), was the employer. The Second Respondent, Mr Steve Utley, is a director and manager of No Fuss Liquid.

4    The proceeding came before for the Court on a number of occasions for directions, on 22 November 2010, 9 December 2010, 1 February 2011, 13 April 2011 and 1 July 2011.

5    Any necessity to resolve the facts which gave rise to the present proceeding has been removed by the parties having prepared an agreed statement of facts. Given that agreement, the only issue presently before the Court is the imposition of penalties. The facts to which attention is directed are contained in a document headed “Amended Statement of Agreed Facts, Admissions and Recommended Orders”. A further statement of agreed facts was filed during the course of the hearing itself.

The Background Facts

6    The principal business of No Fuss Liquid is the removal, carting and disposal of liquid waste products. It carried on business, relevantly for the purposes of the present proceeding between July and November 2010, from two premises – one at Emu Plains and the other at Marsden Park. Both are outer suburbs in Sydney. It maintained a fleet of five trucks and one ute. The trucks ranged in carrying capacity from 6,000 litres of liquid waste to 15,000 litres.

7    It employed approximately eight staff. The staff employed were Mr Allan Spackman (supervisor); Ms Alyce Wing (office clerk); Mr Ken Morison (permanent driver), Mr Scott Lansdown (casual driver); Mr Ben Paiti (permanent part-time driver); Mr Jacob Hurinov (casual driver); Mr Scott Nies (driver); Mr Colin Jobson (casual factory hand); and Mr Adam Keanan (casual factory hand).

8    No Fuss Liquid did not have an enterprise agreement or other instrument that governed the terms and conditions of its workers. At all relevant times the terms and conditions of its workers were covered by the Waste Management Award 2009. Permanent employed drivers were paid $20.00 per hour and casual drivers were paid $22.00 per hour. Mr Paiti was paid $18.65 per hour. Working weeks of approximately fifty to sixty hours were not uncommon.

9    The dispute that emerged seems to have had its origins in what was said to be the bullying behaviour of Mr Utley. It was said that he “threw his weight around”.

10    Concerns emerged as to whether the employees were being paid their correct rate of pay in relation to penalty rates. There was also concern that the employees were not being paid for the full hours worked and concerns as to accrued entitlements. The employees were also being asked to take “sick days” if there was insufficient work and one employee claimed that a period of sick leave had been deducted from annual leave. Many of the employees believed that the maintenance of vehicles was not being conducted in a timely or thorough manner and that the vehicles were not safe to drive. A further concern was that employees were being threatened with demotion from, and were in fact being demoted from, permanent to casual positions arbitrarily.

11    Up until August 2009 the Transport Workers’ Union had no known members employed by No Fuss Liquid.

12    Mr Scott Lansdown as at July 2010 was an unfinancial member of the Transport Workers’ Union. But in August 2010 he contacted the Union and sought its assistance and representation in relation to his concerns. A meeting was arranged with Mr Steve Cummins, an official of the Union and a full-time organiser. On 17 August 2010 Mr Cummins and Messrs Lansdown, Paiti, Spackman, Hurinov and Morison met. Mr Cummins provided the others with application forms to join the Union. Those forms were completed and provided to Mr Cummins. They thereupon became members of the Transport Workers’ Union.

13    On 23 August 2010 Mr Morison sought the assistance of Mr Cummins arising out of a threat of demotion. A customer of No Fuss Liquid had complained that Mr Morison was using an unsafe truck. Mr Utley said that Mr Morison’s work was unsatisfactory. Mr Cummins and Mr Utley met for the first time at the Emu Plains property. The purpose of the meeting was to deal with Mr Morison’s concerns. Mr Utley said:

“We have no union here.”

Mr Utley gave Mr Morison a written warning in relation to his alleged misconduct.

14    Around 16 September 2010 Mr Cummins was again contacted, this time by Mr Paiti in relation to his demotion from a permanent part-time employee to a casual. Mr Utley alleged that Mr Paiti had threatened him. Mr Paiti said he would raise his concerns with “the union”.

15    Mr Cummins, in consultation with other senior officials of the Transport Workers’ Union, convened a meeting at the Emu Plains property at 6.30 am on 17 September 2010.

16    The events on that day were not the subject of dispute. At about 6.30am, Messrs Cummins, Morison and Paiti met outside the premises at Emu Plains. Mr Lansdown arrived sometime later and Mr Spackman was also in attendance. At no time did Mr Cummins enter the premises. The principal matter of the discussion that did take place was the road worthiness of the vehicles of No Fuss Liquid and Mr Cummins indicated to Mr Spackman that he wanted to speak to Mr Utley. Mr Spackman had a number of telephone conversations with Mr Utley who at that stage was still at home. At about 6.45 am the following conversation occurred between Messrs Cummins and Spackman:

Mr Spackman then rang Mr Utley and told him that Mr Cummins was in attendance and that he wanted to talk to him before the commencement of the morning shift at 7.00 am. The following formed part of that conversation:

17    Around 7.00 am, Mr Utley arrived in his car and parked within the premises at Emu Plains. He was agitated, got out of his car and moved towards Mr Cummins and those present. He pointed in the direction of Mr Lansdown and said “You’re sacked”. He then pointed to Mr Morison and said “You’re sacked”. After that he pointed his finger at Mr Paiti and said “You’re sacked”. In addition, he also said “You’re all fucking fired. I’m closing the fucking business. You can’t get fucking nothing out of it”. Mr Cummins said words to the effect “You can’t do that”. Mr Utley then pointed at Mr Cummins and said “You’re gone”. He then approached Mr Cummins and commenced hitting him on the left side of his head with a closed right hand fist. He then proceeded to strike Mr Cummins in the face with both his left and right hands which were closed into fists.

18    Mr Utley suffered a nervous collapse immediately after this incident and was taken in an ambulance to Blacktown Hospital. He was thereafter admitted as an in-patient to St John of God Hospital at North Richmond for a three week period. He was there under the care of Dr Phillip O’Rourke, a psychiatrist. The diagnosis was that Mr Utley had a background of chronic depression with a genetic vulnerability. Dr O’Rourke’s detailed Mr Utley’s admission to a psychiatric hospital in 2005 involving circumstances related to “stress and suicidality”. Mr Utley was examined by Dr John Jacmon, a psychologist, on 22 December 2010. He assessed Mr Utley’s day to day functions as being impaired, relevantly, by borderline personality disorder, depression and anxiety at clinically significant levels. Mr Utley was diagnosed as suffering from post-traumatic stress disorder which pre-dated 17 September 2010. Mr Utley’s impairments, according to Dr Jacmon, markedly diminished his ability to formulate reasoned judgments.

The Fair Work Act

19    The Amended Statement of Agreed Facts accepts that the conduct of the First and Second Respondent contravenes two principal proscriptions concerning freedom of association set forth in the Fair Work Act, namely ss 340 and 346.

20    Section 340 provides as follows:

Protection

(1)    A person must not take adverse action against another person:

(a)    because the other person:

(i)    has a workplace right; or

(ii)    has, or has not, exercised a workplace right; or

(iii)    proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b)    to prevent the exercise of a workplace right by the other person.

(2)    A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.

21    Section 346 provides as follows:

Protection

A person must not take adverse action against another person because the other person:

(a)     is or is not, or was or was not, an officer or member of an industrial association; or

(b)    engages, or has at any time engaged or proposed to engage, in industrial activity within the meaning of paragraph 347(a) or (b); or

(c)    does not engage, or has at any time not engaged or proposed to not engage, in industrial activity within the meaning of paragraphs 347(c) to (g).

The Power To Make Orders and To Impose Penalties

22    Section 545 of the Fair Work Act confers wide powers upon the Court as to the orders it may make. The section provides in part as follows:

Orders that can be made by particular courts

Federal Court and Federal Magistrates Court

(1)    The Federal Court or the Federal Magistrates Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

(2)    Without limiting subsection (1), orders the Federal Court or Federal Magistrates Court may make include the following:

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

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

(c)    an order for reinstatement of a person.

…

When orders may be made

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

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

(b)    on application.

23    Of immediate relevance is the power conferred by s 545(2)(b) to make an order “awarding compensation for loss that a person has suffered because of the contravention”. An order pursuant to that power may include an amount representing “hurt and humiliation” suffered by reason of a contravention: Australian Licensed Aircraft Engineers Association v International Aviations Service Assistance Pty Ltd [2011] FCA 333. Barker J there observed:

[441] The question arises, however, whether the court may order compensation, that is to say the payment of a pecuniary sum on account of hurt and humiliation found to be a direct consequence of contravention of ss 340 and 346 of the FW Act. There is no direct authority under the FW Act concerning this question. However, approaching the question as a matter of first principle, it is plain that s 545(1) is intended to provide the court with a very broad power to make appropriate orders where contravention is established. In this s 545(2) provides confirmation that certain types of orders — for example, an order awarding compensation for the loss a person has suffered because of a contravention — may be made. But s 545(2), in this regard, expressly states that it has effect “without limiting subs (1)”.

[442] As a matter of principle it is difficult to see why a compensatory financial order cannot be made in respect of hurt and humiliation (or “shock, distress and humiliation” as s 329(4) of the FW Act describes this head of loss) shown to be a direct consequence of a contravention. At common law, courts have been reluctant to provide damages for a breach of a contract which results in hurt and humiliation, unless the parties to the contract can be taken to have contemplated such damages for breach: Baltic Shipping Co v Dillon [1993] HCA 4; (1992) 176 CLR 344 (Baltic Shipping), for example at 365, Mason CJ. There are special reasons usually cited by courts as to why this common law position in respect of breach of contract should obtain. For example, in Baltic Shipping, at 369, Brennan J suggested that if a promisor in a usual commercial setting were exposed to such an indefinite liability in the event of breach of conduct, the making of commercial contracts would be inhibited.

[443] However, the power of the court under s 545(1) and (2) to make appropriate orders following contravention including an order for compensation is quite divorced from this type of contractual consideration. As a matter [of] broad public policy, the Parliament of Australia has provided that the court may give appropriate relief where contravention is proved. Relief in these circumstances helps to uphold the policy indicated in the FW Act that, amongst other things, contraventions of the freedom of association provisions should not occur and that appropriate orders should be made to remedy the contravention of such provisions. There is, therefore, in my view, no obvious policy consideration that militates against the making of a compensation order under s 545(1) or a compensation order under s 545(2), for the sorts of reasons that have inhibited the award of damages at common law for a breach of contract which is attended by shock, distress or humiliation.

[444] Indeed, there are other indications in the FW Act itself that suggest that s 545(1) and (2) should properly be construed to this effect …

No different conclusion was advanced in the present case and it may therefore be accepted that the power conferred by s 545(2)(b) extends to the making of an order awarding “compensation” to a person both by reason of (for example) any loss of salary or income that may have followed from the contravention together with an amount representing “hurt and humiliation”.

24    The power to impose pecuniary penalties is to be found in s 546 of the Fair Work Act which provides as follows:

Pecuniary penalty orders

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

Determining amount of pecuniary penalty

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

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

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

Payment of penalty

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

(a)    the Commonwealth; or

(b)    a particular organisation; or

(c)    a particular person.

Recovery of penalty

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

No limitation on orders

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

The “maximum number of penalty units” for the purposes of s 546(2)(a) is $6,600; and for the purposes of s 546(2)(b) is $33,000.

25    The principles to be applied when determining the appropriate penalty to be imposed have previously been addressed by Moore J in Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585, 177 IR 306. The applicant in that proceeding, Mr Rojas, was a member of the National Union of Workers of Australia and had had his employment terminated and alleged the dismissal contravened s 792 of the Workplace Relations Act 1996 (Cth). His Honour embraced the following observations of Branson J in Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) [1999] FCA 1714; 94 IR 231 at 232:

[7] The Act gives no explicit guidance as to the circumstances in which an order imposing a penalty under s 298U [a predecessor provision to s 807] 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.

[8] 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.

Moore J noted that this “check list” provided a “useful starting point in determining whether a penalty ought to be imposed, and if so the level of such penalty” but further observed that “at the end of the day the task for the Court is to fix a penalty that pays appropriate regard to the contraventions that have occurred”. He concluded on the facts there presented that a “mid-range” penalty should be imposed. The power to impose a penalty was there conferred by s 792 of the Workplace Relations Act. Various other Judges of this Court have also expressed, albeit in differing terms, a list of “non-exhaustive” considerations to be taken into account when assessing the penalty to be imposed: e.g., Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426 at [40] per Tracey J; Fair Work Ombudsman v Transport Workers’ Union of Australia [2010] FCA 768 at [26] to [27], 202 IR 411 at 417 to 418 per Besanko J.

26    The generality of these “non-exhaustive” lists have been provided and applied in a variety of different but broadly comparable statutory contexts and provide valuable “check lists” to be borne in mind. But one consideration which must always be taken into account is the manner in which the impugned conduct impacts upon the objects and purposes of the particular statute to be applied. Conduct which may be serious but incidental to the objects and purposes of one statute may strike at the very heart of a fundamental objective sought to be achieved in a different statutory context. Conduct endangering safety, for example, may assume greater importance when considering the penalty to be imposed for contraventions of requirements going to occupational health and safety (cf. Darlaston v Parker (No 2) [2010] FCA 1382, 200 IR 353) than when considering other contraventions. In the present proceeding, emphasis was rightly placed upon the conduct of Mr Utley striking at the heart of the rights set forth in ss 340 and 346 of the Fair Work Act.

27    In Rojas, Moore J also made the following observations as to the person to whom any penalty should be paid:

[68] The question that then arises is whether the penalty should be paid to the NUW, as the applicant submited it should. The respondent submitted that it opposed that course (and any penalty should be paid to the applicant and the balance (if any) to the Commonwealth), although the only submission made as to why this was so was to the effect that a penalty should not be imposed or ordered to be paid to an organisation bringing penalty proceedings or supporting an individual who has brought them as a means of wholly or partly reimbursing the organisation for its legal costs. There is Full Court authority, Victoria University of Technology v Australian Education Union (1999) 91 IR 96 where it was said that it would be wrong to be influenced by a concern to reimburse an applicant organisation for costs incurred in prosecuting an application when determining whether a penalty should be imposed and if so, in what amount. Doubtless this is correct. However, once a decision has been made to impose a penalty and the amount of the penalty determined by application of accepted principles, I see no reason why it cannot be ordered to be paid to an organisation who has brought or supported the proceedings even if there is a real prospect it will be used to defray in whole or in part the legal costs of the organisation. It is true that the WR Act effectively prohibits the ordering of costs, or put slightly differently, substantially curtails the power to order costs in proceedings brought under that Act. Equally, however, the WR Act confers an express power to order that a penalty be paid to someone other than the Commonwealth, a power which the Act does not expressly qualify or constrain.

In Woodside Burrup Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FCA 949 at [106] to [136] Gilmour J has helpfully reviewed the authorities. Much depends upon the statutory provisions in issue. But one recurring theme is the ability to make an order in favour of a person or organisation that brings penalty proceedings provided that such an order should not be made if it would result in a “windfall gain”.

28    The quantum of a penalty to be imposed is ultimately a matter for the Court to determine, even in those cases where there may be agreement between the parties: Woodside Burrup at [11] to [13] per Gilmour J.

29    It was not suggested by any of the parties that the principles to be applied when assessing the penalty to be imposed pursuant to s 546 of the Fair Work Act were any different to those espoused by Branson J in Coal and Allied Operations and by Moore J in Rojas.

30    Section 557(1) of the Fair Work Act should also be briefly mentioned. That sub-section provides as follows:

For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:

(a)    the contraventions are committed by the same person; and

(b)    the contraventions arose out of a course of conduct by the person.

31    The orders which are “recommended” in the present proceeding were set forth in the agreed statement prepared by the parties as follows:

RECOMMENDED ORDERS

75.    The issue of whether the court should impose a pecuniary penalty and the amount is a matter that the Parties wish the court to determine. It is the joint submission of the Parties that any penalties imposed on the Respondents should [sic] paid to the Applicant under paragraph 546(3)(b) of the Act.

76    In relation to orders under section 545, the Parties jointly submit to the Court that the following orders are appropriate in this proceeding, given the relevant circumstances:

(a)    The First and Second Respondent pay, and are jointly and severably liable to pay, $8333.00 to Scott Lansdown.

(b)    The First and Second Respondent pay, and are jointly and severably liable to pay, $8,333.00 to Ken Morison.

(c)    The First and Second Respondent pay, and are jointly and severably liable to pay, $8,333.00 to Ben Paiti.

(d)    The First and Second Respondent pay, and are jointly and severably liable to pay, $5,001.00 to Jacob Hurinov.

(e)    The Second Respondent is banned from being a director of the First Respondent for a period of five (5) years.

(f)    The Second Respondent undertakes not to manage staff in relation to the business of the First Respondent or any other enterprise for a period of five (5) years.

(g)    The time to pay any amounts ordered under section 545 is in accordance with the agreement of the Parties.

The Orders To Be Made

32    Notwithstanding this agreed position as between the parties, separate consideration nevertheless needs to be given to:

    the quantum of any penalties to be imposed upon No Fuss Liquid and Mr Utley pursuant to s 546 of the Fair Work Act;

    the entity to whom those penalties should be paid;

    the quantum of any amount that ought to be paid to the employees pursuant to s 545 of the Fair Work Act; and

    whether any order should be made disqualifying Mr Utley from being a director of No Fuss Liquid and banning him from managing staff in relation to that business.

33    For the purposes of approaching the penalties to be imposed, the submission advanced on behalf of the Respondents as to the application of s 557(1) is accepted. The actions of No Fuss Liquid and Mr Utley should be taken to constitute a single contravention as they were committed by the same person and arose out of a course of conduct by Mr Utley.

34    The position of the Applicant is that the quantum of the penalty to be imposed should be “no less than 75% of the maximum penalty”. In the case of the First Respondent the maximum penalty is $33,000, with 75% being $24,750; for the Second Respondent it is $6,600, with 75% being $4,950. On behalf of the Respondents, it is submitted that the appropriate range of penalties for both No Fuss Liquid and Mr Utley should be in the range of 10% to 15%.

35    In seeking a penalty in the sum of 75% of the maximum, reliance is placed by the Applicant upon Rojas and Construction, Forestry, Mining and Energy Union v Stuart-Mahoney [2011] FCA 56. In Rojas, Moore J imposed a penalty of $12,000 pursuant to s 807(1)(a) of the Workplace Relations Act. In doing so, His Honour said:

[66] I have concluded that, in the circumstances, a mid-range penalty should be imposed. No evidence was led to indicate that the respondent had engaged in similar conduct in the past. It is of some significance, in my opinion, that the decision to terminate the applicant was made against a background where the decision maker, Mr Starr, and the person with whom he was then consulting, Mr Reidy, had experienced, over a sustained period, an intense industrial campaign that appears to have got entirely out of hand. This is likely to have affected their judgment and sense of balance. Against that, however, has to be weighed the fact that the industrial campaign was in response to the respondent’s attempts to negotiate a “modern” agreement and then propose employment on AWAs to its employees. While it was lawful for it to do so, those making decisions for the respondent could not have assumed that this approach would go unchallenged by the workforce it might affect.

[67] In addition, imposing a penalty will provide deterrence, both general and specific … The maximum penalty is $33,000. I consider that, in this case, an appropriate penalty is $12,000.

Reliance was also placed upon the following observations of Ryan J in Stuart-Mahoney:

[96] The appellants submit that the penalty of 75% of the maximum for the CFMEU and 91% of the maximum for Deans was excessive, offending the principle that the maximum penalty should be reserved for only the worst imaginable case. The argument proceeded that the learned Federal Magistrate had been wrong to impose such a high penalty, so close to the maximum, in a case where Deans’ and the CFMEU’s contravention was not in the “worst category of breaches” for the purpose of ss 789 and 790 of the WR Act. I reject this submission.

[97] The penalty imposed on the CFMEU was 75% of the maximum pecuniary penalty prescribed by s 807 of the WR Act for contravention of a civil remedy provision, including s 797(3). It may be said to be in the middle of the higher end of the range. I do not consider that a penalty at 75% of the maximum should necessarily be reserved for the worst category of cases. There is clearly room in the upper 25% for penalising more serious unmitigated infractions. Taking into account the circumstances of the case, as well as the relevant considerations of specific and general deterrence, the learned Federal Magistrate imposed a penalty which, in my view, was not manifestly excessive. The penalty in relation to the CFMEU has not been demonstrated by the appellants to be outside the range available pursuant to a proper exercise of judicial discretion. In light of the number of relevant factors discussed by the learned Federal Magistrate in the Penalty Judgment, I regard the penalty imposed on the CFMEU for the contraventions of the relevant provision of the WR Act in relation to Gauci as reasonable in the circumstances.

36    The submission that the penalty should be assessed at 75% of the maximum, however, is rejected. It is considered that an appropriate penalty for the First Respondent should be $10,000 and for the Second Respondent it should be $2,250.

37    Those considerations identified by Branson J in Coal and Allied Operations, and as endorsed by Moore J, in Rojas have been used as a “useful starting point” when considering the penalty to be imposed.

38    Unquestionably the assault upon Mr Cummins warrants particular attention, as does the need to ensure that a penalty is sufficiently onerous to operate as a deterrence to others. Also to be taken into account is the fact that the services of Messrs Lansdown, Morison, Paiti and Hurinov were terminated and there has been no payment to any of those former employees of any monies in lieu of notice.

39    But those factors which in the circumstances of the present case warrant the penalties being less than that sought by the Applicant are the following:

    the equivocal nature of the communications between Mr Utley and Mr Cummins in August and September 2010 and uncertainty as to whether there was then communicated an unequivocal opposition to union activity;

    the fact that the assault upon Mr Cummins, although serious, is not considered to be a premeditated action;

    the admissions on the part of No Fuss Liquid and Mr Utley as to contraventions of ss 340 and 346 of the Fair Work Act;

    the co-operation on the part of both No Fuss Liquid and Mr Utley in the preparation of the agreed statement of facts;

    the medical condition affecting Mr Utley in September 2010; and

    the fact that the Respondents had acknowledged wrongdoing by the willingness on the part of Mr Utley to be banned from being a director and to have no involvement in the management of staff.

Although the Respondents expressed the willingness on the part of Mr Utley to be disqualified and to be banned from involvement in management in terms of “contrition”, it must further be recognised that a more telling act of contrition would have been payment of monies to Messrs Lansdown, Morison, Paiti and Hurinov at about September 2010 rather than consent to orders some 10 months later.

40    For the purposes of s 546(3) of the Fair Work Act it is concluded that those penalties should be paid to the Applicant.

41    Section 545(2)(b) of the Fair Work Act confines the ambit of the power there expressly conferred upon the Court and confines that power to the making of an order “awarding compensation for loss that a person has suffered because of the contravention”. The object and purpose of that power is obviously quite separate and distinct from the power to order the payment of a penalty pursuant to s 546. Before the power conferred by s 545(2)(b) may be exercised, however, there must be either evidence or an agreed statement of facts which provides a factual foundation for any conclusion that a person has in fact suffered loss. In the absence of such a factual foundation, an order for the payment of monies may operate as but a de facto further penalty.

42    The “Amended Statement of Agreed Facts, Admissions and Recommended Orders” as initially filed relevantly did little more than to state a range of gross earnings for each of Messrs Landsdown, Morison, Paiti and Cummins. Other than in respect to such “hurt and humiliation” that each may have suffered as a result of the contraventions involved, there was no basis initially advanced upon which any conclusion could be reached that they had suffered any other “loss”. Mere agreement between the parties as to the amount which had been mutually agreed as an appropriate amount to be ordered pursuant to s 545(2)(b), it was considered, was an inadequate foundation upon which an order could be founded. The supplementary factual agreement, however, filled that void. An order should be made in accordance with the amount of compensation in the “Recommended Orders”.

43    The “Recommended Orders” as to the banning of Mr Utley from being a director of No Fuss Liquid for a period of five years and his undertaking not to “manage staff in relation to the business of” No Fuss Liquid for a period of five years are far more questionable. The making of such an order and the proffering of the undertaking was jointly proposed by both the Union and the Respondents. Power to make the order recommended, it was jointly said, was to be found in the generality of the powers conferred by s 545(1). The power, it was also jointly said, was a power to “make any order the court considers appropriate”. The making of such an order, it was further jointly accepted, would be a “novel order”.

44    Grave reservation, however, was expressed during the course of the hearing as to whether s 545 conferred any power to ban a person from being a director. Certainly no such power was expressly conferred. Although it may readily be accepted that s 545(2) is not an exhaustive statement of the full ambit of the powers conferred by s 545(1), it is considered that such a power must be either conferred by express words or be such as to be necessarily implied.

45    Why any power to disqualify a person from being a director of a company, or having any involvement in the management of a company, was not properly a matter to be left to the Corporations Act 2001 (Cth) was not satisfactorily explained in such supplementary submissions as were filed subsequent to the hearing. Express powers, by way of contrast, are conferred upon the Court by (for example) ss 206C and 206E of the Corporations Act to disqualify a person managing a corporation. Power is also conferred by that Act (s 853C) upon the Australian Securities and Investments Commission to declare that a person is disqualified from managing particular corporations. The principles to be applied when disqualification orders are sought were espoused by Santow J in Re HIH Insurance Ltd; Australian Securities and Investments Commission v Adler [2002] NSWSC 483 at [56], 42 ACSR 80 at 97 to 98. His Honour there said (in part):

[56] … The propositions that may be derived from these cases include:

(i)    Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards …

(ii)    The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office …

(iii)    Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors …

(iv)    The banning order is protective against present and future misuse of the corporate structure …

(v)    The order has a motive of personal deterrence, though it is not punitive …

(vi)    The objects of general deterrence are also sought to be achieved …

(vii)    In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company …

(vi)    Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty …

(ix)    In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public …

(x)    It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct….

(xi)    A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming …

See also: Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; Australian Securities and Investments Commission v Axis International Management Pty Ltd (No 6) [2011] FCA 811. Power to disqualify persons from involvement in the running or management of corporations is not confined to the Corporations Act. Power, for example, is also conferred upon this Court upon the application of the Australian Prudential Regulation Authority to disqualify a person by s 25A of the Insurance Act 1973 (Cth). See: Kamha v Australian Prudential Regulation Authority [2005] FCAFC 248, 147 FCR 516.

46    No submission, it should be noted, was advanced in the present proceeding that the powers conferred by the Corporations Act are themselves an exhaustive code setting forth the only circumstances in which such orders may be made. The issue was left to be resolved solely by reference to the terms employed in s 545.

47    In the absence of such further more detailed submissions as would have been considered appropriate and desirable in circumstances where such a “novel order” is sought, it is concluded upon the generality of the arguments presently advanced that s 545 does not confer power to make an order disqualifying a person from being a director or to exact any undertaking that a person not have any further involvement in the management of a company. The reach of the Fair Work Act obviously extends beyond constraints upon the conduct of individuals; it thus expressly confers power to impose a penalty upon a corporation as well as an individual. But the generality of language employed in s 545, it is concluded, does not confer power upon the Court to disqualify a person from being a director of a company where both the individual and the corporation have committed a contravention. Nor is it considered that the object and purpose of the Fair Work Act would be promoted by such a conclusion. A power to order the disqualification of an individual from being a director by reason of his abuse of the corporate structure, it is concluded, is not a power which falls comfortably within the general object of the Fair Work Act in s 3, namely “to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians”.

48    Consent to the making of such an order does not confer power upon the Court where none truly exists.

Conclusions

49    It is concluded that a penalty should be imposed upon No Fuss Liquid and Mr Utley pursuant to s 546 of the Fair Work Act, but not a penalty being 75% of the maximum.

50    Orders should also be made pursuant to s 545 of the Fair Work Act awarding “compensation for loss”.

51    No power is conferred by s 545 to order that a person be disqualified from being a director of a company that has been involved in a contravention of the Fair Work Act or to accept any undertaking that a director of such a company not be involved in the management of the staff of such a company. The orders to be made are to be made substantially in accordance with a form of “Consent Orders” jointly signed by the parties and dated 18 July 2011.

ORDERS

The Orders of the Court are:

1.    Pursuant to s 546 of the Fair Work Act 2009 (Cth) a penalty in the amount of $10,000 be imposed upon the First Respondent.

2.    Pursuant to s 546 of the Fair Work Act 2009 (Cth) a penalty in the amount of $2,250 be imposed upon the Second Respondent.

3.    Pursuant to s 546(3)(b) of the Fair Work Act 2009 (Cth) the penalties imposed pursuant to Orders 1 and 2 are to be paid to the Applicant.

4.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Scott Lansdown.

5.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Ken Morison.

6.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably liable to pay, compensation in the amount of $8,333.00 to Mr Ben Paiti.

7.    Pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) the First and Second Respondent pay, and are jointly and severably, liable to pay compensation in the amount of $5,001.00 to Mr Jacob Hurinov.

8.    The amounts of compensation ordered to be paid pursuant to Orders 4 to 7 inclusive are to be paid in accordance with an agreement between the parties and are in full and final satisfaction of all claims as against the First and/or Second Respondent.

Associate:

Dated:    26 August 2011