FEDERAL COURT OF AUSTRALIA

Ramsay v Menso [2019] FCA 1273

ORDERS

THE COURT ORDERS THAT:

1.    The Appeal be allowed.

2.    Orders 2, 3, 5 and 6 of the Order of the Federal Circuit Court given on 28 June 2018 at Brisbane in Ramsay v Menso (No 2) [2018] FCCA 1808 be varied as follows:

(a)    delete the word “Commonwealth” at the end of Order 2 and replace it with “First and Second Applicants”;

(b)    delete the word “Commonwealth” at the end of Order 3 and replace it with “First and Second Applicants”;

(c)    delete the word “Commonwealth” at the end of Order 5 and replace it with “First and Second Applicants”; and

(d)    delete the word “Commonwealth” at the end of Order 6 and replace it with “First and Second Applicants”.

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

REASONS FOR JUDGMENT

COLLIER J:

Background

1    This is an appeal in relation to Orders 2, 3, 5 and 6 of the primary Judge in Ramsay v Menso (No 2) [2018] FCCA 1808 insofar as those Orders require the payment of penalties imposed to be paid to the Commonwealth and not to the appellants.

2    There is no appeal in respect of the quantum of the penalties ordered by the primary Judge.

3    The appellants were holders of right of entry permits under the Fair Work Act 2009 (Cth) (the Act) and the Work Health and Safety Act 2011 (Qld). On three occasions on 11 December 2015 the appellants sought to enter a building site controlled by the second respondent to conduct a safety inspection. On three separate occasions the respondents prevented the appellants from entering. In Ramsay v Menso (2018) FCAFC 55 the Full Court determined that the respondents each contravened s 501 of the Act on three occasions.

4    After making relevant declarations his Honour ordered as follows:

(1)    That for the contravention of s.501 of the FW Act by the First Respondent, and referred to at “A” above, the First Respondent pay a pecuniary penalty in the sum of $500.00 to the First and Second Applicants.

(2)    That for the contravention of s.501 of the FW Act by the First Respondent and referred to at “B” above, the First Respondent pay a pecuniary penalty in the sum of $9,000.00 to the Commonwealth.

(3)    That for the contravention of s.501 of the First Respondent and referred to at “C” above, the First Respondent pay a pecuniary penalty in the sum of $9,000.00 to the Commonwealth.

(4)    That for the contravention of s.501 of the Second Respondent and referred to at “D” above, the Second Respondent pay a pecuniary penalty in the sum of $2,500.00 to the First and Second Applicants.

(5)    That for the contravention of s.501 of the Second Respondent and referred to at “E” above, the Second Respondent pay a pecuniary penalty in the sum of $45,000.00 to the Commonwealth.

(6)    That for the contravention of s.501 of the Second Respondent and referred to at “F” above, the Second Respondent pay a pecuniary penalty in the sum of $45,000.00 to the Commonwealth.

(7)    That the pecuniary penalties with respect to Orders 1 to 7 above be paid within 90 days from the date of these Orders.

5    In doing so his Honour relied on s 546(3) of the Act which provides:

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.

6    At the hearing of the appeal before me there was no appearance by the first and second respondents, and no explanation for this want of appearance. I directed the Court officer to call the matter outside the courtroom but there was no response. All parties had had an opportunity to file submissions (which they did) and there is no suggestion that the first and second respondents were unaware of the listing.

7    The appellants and the Commissioner appeared represented by Counsel. I granted leave for the appellants to file and rely on an affidavit of Mr Luke Tiley affirmed 25 July 2019. In his affidavit Mr Tiley, the solicitor for the appellants, deposed that the registration of the second respondent Z Group Pty Ltd was reinstated with effect from 30 April 2019. Mr Tiley’s affidavit annexed correspondence from the Australian Securities and Investments Commission to that effect.

8    I am satisfied that the registration of the second respondent has been reinstated and that it has standing to meet the current appeal.

9    In the circumstances I determined that it was appropriate for the hearing to proceed.

Reasoning of the primary Judge

10    From [28] in the reasons of the primary Judge his Honour considered the question of to whom the penalties ordered should be paid.

11    Before his Honour the appellants submitted that all penalties should be paid to them, relying on the authority of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; (2016) 239 FCR 336 and Milardovic v Vemco Services Proprietary Limited [2016] FCA 244; (2016) 242 FCR 492. Counsel submitted that the Federal Circuit Court was bound by both decisions.

12    His Honour disagreed, observing relevantly:

42.    What I take from Sayed is that the Court there acknowledged that there is a discretion under s.546(3), but that the primary judge had erred in the exercise of that discretion.

…

44.    The way in which Mortimer J has interpreted Sayed (Supra) means that s.546(3) now does not allow a discretion for the Court to exercise; in effect, that the subsection should now be interpreted as mandating that the Court must order that the pecuniary penalty be paid to the Applicant, unless there is some overriding reason for the Court not to do so.

45.    With the greatest of respect to Her Honour, I do not accept that the decision in Sayed (Supra) has gone that far so as to remove the discretion from the Court. It matters not in this case whether Mr Ramsay and Mr Stott are prosecuting this matter of their own accord, or are doing so with the relative might of the CFMEU behind them. The principle is still the same.

46.    In this case, the gravamen of the contravention has been because of the actions of persons who were not the prosecutors; that is, Mr Williamson and Sergeant Conrad Greenwood.

47.    As I have found in my original reasons, this really is a matter where the behaviour of the Applicants was not wholly consistent with what I would have expected if the true concern was that of the safety of the workers. Now, while none what I have observed derogates from the rights that the Applicants were exercising that day, it is simply that the situation of the Applicants is in a far different category to that of most other Applicants seeking relief under the Act in relation to the second and third contraventions.

48.    The gravamen of the second and third contraventions is that the First Respondent blatantly disregarded persons in authority. Those persons in authority coolly and calmly explained to the Respondent what her obligations were under the law.

49.    The question is whether, in all of the circumstances, I should exercise my discretion in favour of the payment of the pecuniary penalties to the Applicants or to the Commonwealth? I do note that the Australian Building and Construction Commissioner, who has intervened in these proceedings, does not make any submissions on this matter, and he is content if I make the sort of the order that the Applicants have asked for.

50.    As I say, this is a matter that is in my discretion. There are three distinct contraventions and the same order as to payment of the pecuniary penalties does not necessarily have to be the same in respect of all three contraventions.

13    His Honour examined the contraventions and observed:

53.    As I have earlier said, the Court is imposing the large pecuniary penalties to ensure that it is well and truly noted, by all who are subject to the Act, that it is a necessary part of the structure of our society that persons comply with this Act, and because of the disruption to society when people do not comply with this Act, such heavy penalties ought be imposed.

14    His Honour noted the purpose of pecuniary penalties as discussed by the High Court in Commonwealth of Australia v Director, Fair Work Building Industry Assessment [2015] HCA 46; (2015) 258 CLR 482 at [55] and continued:

55.    In this matter, it is not just contravening the Act that must be deterred but also the recalcitrance in listening to Mr Williamson and Sergeant Greenwood.

56.    In my view, that is a very major factor in weighing how the discretion, as to whom the Court should order that the penalties be paid in relation to the second and third contraventions, should be exercised. The real persons offended against by the First Respondent in relation to the second and third contraventions are the community of this nation. It is to them that these penalties should be paid. This conclusion is consistent with the reasoning in Sayed (Supra).

57.    The section allows me to pay part of the penalty to a particular organisation or a particular person, or to the Commonwealth and the circumstances of this case illustrate why such a discretion is actually needed.

58.    In this case I order that the pecuniary penalty for the first contravention – that is, the $2,500.00 the Z Group will have to pay, and the $500.00 that Ms Menso will have to pay, should be paid to Mr Ramsay and Mr Stott, the Applicants.

59.    The other pecuniary penalties, that is the $9,000.00 and $45,000.00 in both contraventions 2 and 3, are ordered to be paid to the Commonwealth.

Submissions of the parties

15    In summary the appellants submitted:

    The explanatory memorandum to the legislation introducing s 546(3) referred to the flexibility of the court to award the penalty to someone other than the plaintiff or applicant where so requested;

    The Full Court in Sayed undertook a comprehensive survey of relevant authorities, and concluded at [101] that the power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant;

    The Full Court in Sayed also had regard to observations of Gray J in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357 at [44] to the effect that the initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons;

    The effect of the Full Court’s decision in Sayed is that civil penalties are to be paid to the successful applicant unless the applicant is a Commonwealth inspector (in which case the penalties are to be paid to the Commonwealth) or is an affected employee who has been supported by a union (in which case the penalties may be paid to the union);

    In Milardovic, Mortimer J found that the decision in Sayed required the Court to make an order that the penalty the Court had imposed on it be paid to Mr Milardovic, and that the decision in Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223-224 was not relevant in that case;

    The primary Judge erred in asserting that the effect of Sayed was that there was a discretion under s 546(3) of the Act permitting an award of penalties to the Commonwealth in the circumstances;

    The primary Judge’s reasons at [46]-[52] were at odds with Sayed;

    In any event the primary Judge’s exercise of the discretion miscarried because his Honour focussed on the involvement of Mr Williamson and Sergeant Greenwood in the contraventions, but at [56] completely overlooked that the rights which were infringed by the respondents’ conduct were those of the appellants. Accordingly his Honour’s failure to take this factor into account was an error of the type described in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505.

16    The appellants seek the following orders :

1.    Orders 2, 3, 5 and 6 of the Order of the Federal Circuit Court given on 28 June 2018 at Brisbane be varied as follows:

a.    delete the word “Commonwealth” at the end of Order 2 and replace it with “First and Second Applicants”;

b.    delete the word “Commonwealth” at the end of Order 3 and replace it with “First and Second Applicants”;

c.    delete the word “Commonwealth” at the end of Order 5 and replace it with “First and Second Applicants”; and

d.    delete the word “Commonwealth” at the end of Order 6 and replace it with “First and Second Applicants”.

2.    Such further or other orders as the Court considers appropriate.

17    Ms Menso submitted, in summary:

    Ms Menso is currently paying the penalties pursuant to a payment plan accepted by the Commissioner at $100 per month.

    Ms Menso has paid $500 to the appellants.

    Ms Menso does not earn an income, and owns no assets.

    The second respondent Z Group Pty Ltd is deregistered.

18    The Commissioner submitted, in summary:

    The correct principles to be applied in respect of the discretion conferred by s 546(3) are those set out in Sayed;

    The “ordinary rule” in Sayed or the “usual order” is just that, and is the order which would be made in the ordinary or usual case, which is a different thing from suggesting that the Court is bound to follow that course except in the particular cases which were outlined in authorities referred to by the Full Court in Sayed;

    The Court retains a discretion in the awarding of penalties under s 546 to order that penalties be paid to someone other than the applicant;

    To the extent that it be suggested that the primary Judge was bound by the decision in Sayed and other authorities to pay the pecuniary penalty to the applicants only, that contention is not to be accepted, save and except if to do so would be the ordinary or usual circumstance which applied having regard to the facts of that particular case;

    This matter is not one which stands outside the ordinary or usual case, having regard to the facts found by the primary Judge;

    As a general proposition, the outcome of the appeal sought by the appellants should be accepted.

Consideration

19    It is apparent that there is consensus between the appellants and the Commissioner that the appeal should be allowed in the terms sought by the appellants. From her written submissions, Ms Menso does not appear to take a position in respect of the issues the subject of this appeal, but rather seeks to re-agitate issues in respect of contravention already determined earlier by the Full Court in Ramsay v Menso (2018) FCAFC 55. No notice of contention was filed by Ms Menso referable to the primary Judge’s decision.

20    As the appellants and the Commissioner properly identified, the ordinary rule to which the power conferred by s 546(3) is directed is that pecuniary penalties awarded by the Court are paid to the successful applicant. In this case his Honour directed that the bulk of penalties awarded should be paid to the Commonwealth, primarily because of the recalcitrance of Ms Menso in listening to Mr Williamson and Sergeant Greenwood, and because the “real” persons offended against by the first and second respondents in relation to the second and third contraventions were the Australian community.

21    In Sayed the Full Court observed:

101.    Given the legislative history of ss 539(2) and 546(3) of the FW Act, since the enactment of ss 44 and 45 in the pioneering 1904 Act, and the manner in which the “usual order” was articulated in such early cases as the Vehicle Builders’ Employees’ Federation case and Seymour, which is reflected in the Explanatory Memorandum, we consider that the power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. We accept that there may be cases (of which this is not one) where the penalty, or a part of the penalty, should be paid to another person in the circumstances described by Gray J in Plancor at [44] (as set out at [96] above).

102.    The examples given in the Explanatory Memorandum and by Gray J in Gibbs as to when a payment (or a part payment) might be made to a particular person support the view that, depending on the factual circumstances of a particular case, a particular person for whose benefit, in effect, the contravention proceeding was brought may be the beneficiary of a s 546(3) order in the types of cases there referred to.

(Emphasis added.)

22    In this case the “successful applicants” are the first and second appellants. In accordance with the “ordinary rule” as explained in Sayed they should have been paid the penalties awarded for contravention of the Act.

23    The “Gibbs exception” to which the parties referred in submissions derives from the decision of Gray J in Gibbs at 223-224, namely:

A question also arose as to what order should be made as to the recipient of the penalties. Section 356 of the Act empowers the court to order payment into the Consolidated Revenue Fund or to a particular organisation or person. The usual order, when the proceeding is not brought by an inspector appointed under the Act, is for payment to the person or organisation applying for the penalty…In the present case, the applicant has brought the proceeding on behalf of the Union to enforce the Award for the benefit of the Union and its members. Had the applicant brought the proceeding in his personal capacity, and at his own expense it would have been appropriate to order that the penalties be paid to him. It is unlikely that the applicant has become responsible personally for the costs of the proceeding and more likely that those costs will be met by the Union. In the circumstances, it is appropriate that the Union should be the recipient of the penalties.

24    The circumstances identified in Gibbs are not relevant in this case.

25    While s 546(3) does confer a power on the Court in respect of the award of penalties, that power should be given effect in its context. His Honour interpreted s 546(3) as giving him discretion to award the penalties other than in accordance with the ordinary rule, namely to a party who was neither the successful applicant for the order, nor a party actually bearing the costs of the application (such that it would be appropriate for that person to be the recipient of the penalties). Contrary to the position adopted by his Honour, this view is not supported by Sayed, and indeed is contrary to the authority of that case.

26    Finally, I agree with the submission of the appellants that the consideration to which his Honour had regard in ordering that penalties relating to the second and third contravention be paid to the Commonwealth, namely the failure of the first and second respondents to have regard to the advice of Mr Williamson and Sergeant Greenwood, was irrelevant. As the appellants properly submitted, that the rights being infringed were those of the appellants was not taken into consideration by the primary Judge.

27    The proper orders are that the appeal be allowed, and that Orders requiring payment of the penalties for the second and third contraventions be varied to require those penalties to be paid to the appellants.

Associate:

Dated:    15 August 2019