Federal Court of Australia

Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309

ORDERS

PENAL NOTICE

TO:    MELBOURNE PRECAST CONCRETE NOMINEES PTY LTD AND THOMAS PICHLER

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A)    REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B)    DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

THE COURT ORDERS THAT:

1.    The first respondent pay to the second applicant compensation for non-economic loss of $10,000.

2.    The first respondent pay to the first applicant a pecuniary penalty of $50,000 in respect of its contravention of s 340(1) of the Fair Work Act 2009 (Cth) on 20 March 2020.

3.    The second respondent pay to the first applicant a pecuniary penalty of $10,000 in respect of his contravention of s 340(1) of the Fair Work Act 2009 (Cth) on 20 March 2020.

4.    The amounts referred to in orders 1 to 3 above be paid within 28 days of the date of these orders.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1    On 6 July 2020, the court declared that the first respondent (Melbourne Precast) contravened ss 50, 340(1)(a) and 340(1)(b) of the Fair Work Act 2009 (Cth) (the FW Act) by dismissing the second applicant, Mr Paul Hes, on 20 March 2020: Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd [2020] FCA 931. The court also found that the second respondent, Mr Thomas Pichler, a director of Melbourne Precast, was involved in substantially all of Melbourne Precast’s contraventions.

2    On 21 August 2020, orders were made that Melbourne Precast reinstate Mr Hes to the position he held immediately prior to 20 March 2020 and that it pay him compensation for economic loss: Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 2) [2020] FCA 1215. The questions whether Mr Hes should be awarded compensation for non-economic loss, and whether the respondents should pay pecuniary penalties, were reserved.

3    These reasons address those two remaining questions. They should be read with the reasons given on 6 July and 21 August.

Relevant provisions

4    It is convenient to begin by setting out the most relevant provisions of the FW Act. Those provisions are as follows:

545    Orders that can be made by particular courts

Federal Court and Federal Circuit Court

(1)    The Federal Court or the Federal Circuit 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 Circuit Court may make include the following:

…

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

    …

…

546     Pecuniary penalty orders

(1)    The Federal Court, the Federal Circuit 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.

…

556    Civil double jeopardy

If a person is ordered to pay a pecuniary penalty under a civil remedy provision in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct.

Note:    A court may make other orders, such as an order for compensation, in relation to particular conduct even if the court has made a pecuniary penalty order in relation to that conduct (see subsection 546(5)).

Compensation for non-economic loss

5    Sub-sections 545(1) and (2) of the FW Act empower the court to make an order compensating a person for distress, shock, hurt and humiliation suffered as a result of a contravention of a civil remedy provision of the FW Act: see, eg, Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526 at 594-596 [441]-[450] (Barker J) (ALAEA).

6    Mr Hes has deposed, and it was not disputed, that as a result of being dismissed he experienced shock, hurt, humiliation, disrupted sleep and feelings of worthlessness. He says that his emotional distress was made worse by being incorrectly labelled the second worst-performing employee at Melbourne Precast, and that it has affected both himself and his family. His wife deposed that he has become uncharacteristically sullen and withdrawn since his dismissal.

7    Mr Pichler submits that Mr Hes is not depressed, because, if he were, he would have sought work with other precast concrete manufacturers after being dismissed. It is difficult to see how idleness could prove an absence of depression. In any event, Mr Hes gave evidence that he both sought and obtained alternative work after he was dismissed.

8    Mr Pichler also submits that only “minimal compensation” should be awarded to Mr Hes. He says that anything more would be inappropriate because Melbourne Precast is experiencing serious financial difficulties. I do not accept that submission because, as I have already found, and apart from anything else, Mr Pichler has not proved that Melbourne Precast’s financial difficulties are as grave as he claims: see Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 2) [2020] FCA 1215 at [26].

9    In determining whether to award compensation of the type sought by Mr Hes, it is necessary to ask whether there is an “appropriate causal connection” between the loss suffered and the relevant contraventions of the FW Act: ALAEA at 592 [423]; Dafallah v Fair Work Commission (2015) 225 FCR 559 at 596 [159] (Mortimer J) (Dafallah). The assessment of compensation in this context is an “inherently imprecise” process: Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814; 252 IR 101 at 113 [68] (Siopsis J). Where appropriate, an amount may be awarded that is less than what would be required to compensate the applicant fully for the loss suffered: Dafallah at 596 [157].

10    It was not suggested that Mr Hes has suffered any diagnosed psychological injury or condition as a result of the contraventions. Counsel for Mr Hes submitted that it was not necessary for Mr Hes to prove such an injury or condition in order to be awarded compensation, which I accept. Nonetheless, in my view, the lack of any medical evidence suggesting that Mr Hes has suffered lasting psychological damage remains relevant when assessing the severity of his loss: see, eg, Dafallah at 600 [179].

11    It is also not clear how much of Mr Hes’s distress was caused by the respondents’ contraventions of the FW Act, as opposed to other events that took place prior to his dismissal and were not alleged to constitute contraventions. For instance, in his first affidavit filed in this proceeding, Mr Hes gave evidence about an exchange with Mr Pichler that took place a month before his dismissal. He said that it left him “stressed and upset”, “sick and bewildered”, “anxious” and “very low”. He visited his doctor later that day, who issued him with a medical certificate, prescribed him melatonin to help him sleep, and advised him to seek counselling. He attended counselling before he returned to work. Conversely, in the period after Mr Hes’s dismissal, there was no evidence that he had attended counselling or been prescribed medication (though his doctor has raised concerns about his blood pressure).

12    I do accept that Mr Hes’s dismissal was upsetting and humiliating in and of itself, regardless of what preceded it. Particularly because the reason given for the dismissal was that Mr Hes was a poor performer, which was false. I will make an order for compensation in the sum of $10,000.

Penalties

13    The applicants submit that the respondents should also be ordered under s 546(1) of the FW Act to pay pecuniary penalties in respect of their contraventions. I accept that this is an appropriate case in which to impose such penalties.

14    There are two types of contravention that fall to be considered: the contraventions of s 340(1) of the FW Act arising from the adverse action taken against Mr Hes, and the contraventions of s 50 of the FW Act arising from contraventions of the relevant enterprise agreement – the Melbourne Precast Concrete Nominees Pty Ltd and the CFMEU (Victorian Construction and General Division) Precast Panel Enterprise Agreement 2016-2018 (the Agreement).

Number of penalties to be imposed

15    Each of the declarations of contravention of s 340(1) made on 6 July 2020 related to precisely the same conduct – Mr Pichler’s dismissal of Mr Hes on behalf of Melbourne Precast on 20 March 2020. The multiple declarations reflect the finding that the respondents took adverse action against Mr Hes for multiple prohibited reasons, all of which were alleged and not disproved: see FW Act s 361; Employment Advocate v Barclay Mowlem Construction Ltd [2005] FCA 16; 139 IR 19 at 31 [57] (Branson J).

16    The applicants submit that each respondent was found to have committed multiple contraventions of s 340(1). I do not agree. In my view, while the respondents took adverse action against Mr Hes for multiple prohibited reasons (any one of which would have established a breach of s 340(1)), they still only committed a single prohibited act – dismissing Mr Hes. It follows that each respondent only contravened s 340(1) a single time: cf Australian Nursing Federation v Alcheringa Hostel Inc (2004) 136 FCR 530 at 541-2 [37]-[38] (Ryan J).

17    As to the contraventions of s 50, it is convenient to begin by setting out the relevant terms of the Agreement, which are as follows:

11.3    If the Employer has made a decision to introduce a major workplace change that is likely to have a Significant Effect on a number of Employees, the Employer must notify the Employee(s) who will be affected by the decision.

11.4    As soon as practicable and prior to implementation, the Employer must discuss with the relevant Employees and/or their nominated representative/s (e.g. Union or other representative) the introduction of the change; and the effect the change is likely to have on the Employees. The Employer must discuss measures to avert or mitigate the adverse effect of the change on the Employees.

11.5    For the purposes of the discussion, the Employer will provide the relevant Employees and/or their nominated representative/s in writing:

(a)    All relevant information about the change including the nature of the change proposed;

(b)    Information about the expected effects of the changes on the Employees; and

(c)    Any other matters likely to affect the Employees.

…

11.7    The Employer must give prompt and genuine consideration to matters raised about the major change by the relevant Employees.

…

19.3    Voluntary terminations will be encouraged as a first step.

19.4    The seniority of employees – within classifications, experience or skills held – will be observed by the Employer in selecting employees for retrenchment.

18    The applicants recognise that, to the extent the respondents breached those clauses by dismissing Mr Hes, no penalty can be imposed. They make that submission on the (correct) assumption that the respondents will be penalised for contravening s 340(1) by dismissing Mr Hes, and cannot be penalised again for that same conduct: see s 556 of the FW Act.

19    However, the applicants submit that the respondents’ breaches of cll 11 and 19 of the Agreement involved not only the act of dismissing Mr Hes, but also separate omissions. They submit that the respondents should be penalised for these breaches by having separate regard to the omissions.

20    The applicants submit that the respondents’ breaches of cll 11 and 19 of the Agreement involved the following four omissions, being failures to comply with:

(1)    cl 11.4 by discussing the proposed redundancies with relevant employees or their nominated representatives;

(2)    cl 11.5 by providing employees written information about the proposed redundancies;

(3)    cl 11.7 by giving prompt and genuine consideration to matters raised about the proposed redundancies; and

(4)    cl 19.3 by encouraging voluntary terminations “as a first step”.

21    In my view, however, on the applicants’ pleaded case, the respondents’ contraventions of the Agreement (and therefore of s 50 of the FW Act) arose fundamentally out of the dismissal of Mr Hes.

22    Clause 11.4 required Melbourne Precast to consult with employees about a major workplace change “as soon as practicable and prior to implementation”. In this instance, “implementation” of the change occurred when Melbourne Precast dismissed Mr Hes. That is when the respondents contravened this provision (and cll 11.5 and 11.7, which specify the manner in which the consultation required by cl 11.4 is to occur).

23    A similar analysis applies to cl 19.3. The applicants, with respect, accurately described the effect of this clause in their written submissions on liability: “[t]he obligation to ‘encourage’ voluntary redundancies as a first step conveys that [Melbourne Precast] was obliged to take steps to promote the option of employees voluntarily determining to be made redundant before proceeding to involuntary redundancies”. It was breached when the respondents proceeded to involuntary redundancies, by dismissing Mr Hes, without having first encouraged voluntary redundancies.

24    In any event, that is the way the case was pleaded. The relevant passage from the applicants’ amended statement of claim is as follows:

51.    In dismissing Mr Hes by making him redundant, the First Respondent failed to comply with the provisions of clause 11 of the Agreement by:

51.1    in accordance with clause 11.4, as soon as practicable and prior to implementation of the redundancy, discussing the proposed change with Mr Hes and his representative, its introduction, likely effect and measures to avert or mitigate the adverse effects of the change;

51.2    in accordance with clause 11.5, providing Mr Hes and his nominated representative in writing with all relevant information about the change including the nature of the change; information about the effects of the change on employees and any other matters likely to affect employees;

51.3    pursuant to clause 11.7, not giving prompt and genuine consideration to matters raised about the proposed change by Mr Hes or other affected employees.

52.    In the circumstances, Melbourne Precast contravened s 50 of the FW Act.

53.    In dismissing Mr Hes by making him redundant, the First Respondent failed to comply with the provisions of clause 19 of the Agreement by:

53.1    failing to allow, in accordance with clause 19.3, for voluntary redundancies as a first step;

53.2    not observing the seniority of employees in selecting Mr Hes for retrenchment.

54.    In the circumstances, Melbourne Precast contravened s 50 of the FW Act.

(Emphasis added.)

25    The relevant declarations made on 6 July 2020 were made in the form sought by the applicants and unsurprisingly mirror the pleaded case:

8.    Melbourne Precast contravened s 50 of the FW Act on 20 March 2020 by dismissing Mr Hes in circumstances where it failed to comply with the consultation obligations imposed by clause 11 of the Agreement.

9.    Melbourne Precast contravened s 50 of the FW Act on 20 March 2020 by dismissing Mr Hes in circumstances where it failed to comply with the obligations imposed in relation to redundancy by clause 19 of the Agreement.

…

12.    Mr Pichler was involved in Melbourne Precast’s contravention of s 50 of the FW Act on 20 March 2020 by dismissing Mr Hes in circumstances where it had failed to comply with the consultation obligations imposed by clause 11 of the Agreement, and is taken by s 550 of the FW Act to have contravened s 50 of the FW Act on 20 March 2020.

13.    Mr Pichler was involved in Melbourne Precast’s contravention of s 50 of the FW Act on 20 March 2020 by dismissing Mr Hes in circumstances where it had failed to comply with the obligations imposed in relation to redundancy by clause 19 of the Agreement, and is taken by s 550 of the FW Act to have contravened s 50 of the FW Act on 20 March 2020.

(Emphasis added.)

26    In my view, it is not possible in those circumstances to analyse the pleaded contraventions of s 50 of the FW Act in a way that looks only to the respondents’ omissions, and has no regard to Mr Hes’s dismissal. It follows that to penalise the respondents for their contraventions of s 50 would necessarily be to penalise them again “in relation to” the particular conduct of dismissing Mr Hes. Section 556 of the FW Act operates to prevent that outcome, even though there is not total identity between the conduct comprising the contraventions of s 50 and the conduct comprising the contraventions of s 340(1): Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2019) 272 FCR 290 at 293-294 [14]-[16] (Bromberg, Wheelahan and Snaden JJ).

27    For the foregoing reasons, I will impose penalties in relation to the contraventions of s 340(1), to which the bulk of the applicants’ evidence and submissions were directed. In fixing penalties, however, I will have regard to all of the relevant conduct, including conduct that was relevant to the contraventions of s 50: see Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2018] FCA 163; 358 ALR 725 at 728 [28] (Tracey J). It is in this way that the omissions relied upon by the applicants may properly be taken into account.

Quantum of penalties

28    The principles relevant to the imposition of pecuniary penalties were summarised in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155 at 167-168 [19]-[22] (Allsop CJ, White and O’Callaghan JJ) (Personal Payment Non-Indemnification Case), as follows:

It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at 52,152, cited by the plurality in Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; (2015) 258 CLR 482 at [55]. Retribution, denunciation and rehabilitation have no part to play.

Relevant factors in the overall assessment of penalty were helpfully listed by French J in CSR. They have been adopted in many cases. For present purposes, they can be restated as follows: the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.

The seriousness of the contravention and other features of the conduct which may be seen as relevant to it (here, the seriousness of interruption of a concrete pour, the seriousness of the threats of repetition, the deliberateness of the contravening of the Act, and the exhibited apparent sense of impunity in undertaking contravening conduct) find their place in understanding the degree of deterrence that is necessary to be reflected in the size of the penalty: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68 at [71].

The overwhelming importance of deterrence as the protective purpose of the penalty does not exclude the need to determine a penalty which is proportionate to the contravening conduct. The history of contravention is to be taken into account in fixing the proper level of penalty for the proportionate response to the contravention in question. Proportionality has within it the need to characterise the seriousness of the contravention. Proportionality of penal response to a contravention assessed by reference to its seriousness and gravity is an essential characteristic of the application of the statute. The penal response is for that contravention, not earlier contraventions: Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 477-478. Prior contraventions may reveal an apparent disregard for the Act and the need for deterrence by a penalty at a level appropriate to achieve that objective. It is to be borne in mind, however, that it is for the conduct in question that the penalty is imposed, not for prior conduct.

29    The maximum penalties for the present contraventions are $12,600 in the case of Mr Pichler and $63,000 in the case of Melbourne Precast: FW Act ss 12 (definition of “penalty unit”), 539(2), 546(2); Crimes Act 1914 (Cth) s 4AA. It is necessary to have regard to those maximum penalties, though they should not be applied mechanically, because a comparison of the case before the court with the worst possible case is but one relevant consideration: Personal Payment Non-Indemnification Case at 168-169 [26]-[27], citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at 63 [154]-[156] (Jagot, Yates and Bromwich JJ).

30    The respondents’ contraventions in this case were of a serious nature.

31    I have found that the respondents dismissed Mr Hes because of his role as a health and safety representative (HSR) under the Occupational Health and Safety Act 2004 (Vic) (OHS Act). The applicants submit, and I accept, that Mr Hes’s role as an HSR was an important one. (The applicants point to, among other things, the objects of the OHS Act (which include under s 2(1)(a) securing the health, safety and welfare of workers) and the functions of HSRs under that Act (which include, in certain circumstances, conducting inspections, representing workers at interviews concerning health and safety, issuing provisional improvement notices and directing workers to cease work under ss 58, 60 and 74).) By dismissing Mr Hes, the respondents denied him the ability to exercise that important role. They also denied the employees of Melbourne Precast the assistance of their chosen representative in relation to health and safety matters.

32    I have also found that the respondents dismissed Mr Hes because he made complaints to WorkSafe Victoria. This conduct signalled to other employees that such complaints would be met with retaliation.

33    With these matters in mind, it is clear that the respondents’ contraventions had the potential to affect the safety of workers at Melbourne Precast. Such contraventions are necessarily serious: cf Construction, Forestry, Mining and Energy Union v Decmil Engineering Pty Ltd (No 2) [2017] FCA 1237 at [43] (Tracey J); Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [1] (Marshall J) (Ponzio).

34    The contraventions were deliberate and premeditated. This follows from my finding that Mr Pichler manufactured Mr Hes’s poor score on the “employee skills and attributes evaluation” document, and added Mr Mustafa’s name and signature: Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd [2020] FCA 931 at [109]. I also found that Mr Pichler was aware of the relevant terms of the Agreement at the time Melbourne Precast breached them by dismissing Mr Hes: ibid at [137].

35    The contraventions were effected by Mr Pichler, who was a senior member of Melbourne Precast’s management.

36    Tending against these considerations is the absence of any evidence that either respondent has previously contravened a workplace law. Nonetheless, there is a need in this case for the penalties imposed to deter employers generally from contravening the FW Act: see, eg, Ponzio at [93]. To this end, it is necessary to fix penalties which cannot be regarded as merely an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [64], [66] (French CJ, Crennan, Bell and Keane JJ).

37    As to the circumstances of the defendants, Mr Pichler submits that Melbourne Precast is facing serious financial difficulties, and that “any significant fine / penalty will likely lead to MPC having to shut its doors and the employees who are now on JobKeeper, will then lose their jobs, which would be a real shame in the current environment”. As I have already explained, this submission was not borne out by Mr Pichler’s evidence: see [8] above; Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 2) [2020] FCA 1215 at [26]. Mr Pichler’s personal financial circumstances are unknown, though he submits that at the time of the contraventions he was “struggling to manage a failing business in the middle of a pandemic / recession”, and that this proceeding has had a serious adverse effect on his mental health. I have taken these personal circumstances into account, but, given the deliberate and premeditated nature of Mr Pichler’s contraventions, I do not consider them to be exculpatory in any material degree.

38    There has also been no apology or expression of regret by either Melbourne Precast or Mr Pichler to Mr Hes, nor any apparent cooperation by the respondents with the applicants.

39    Having regard to all of these circumstances, I will order that Melbourne Precast and Mr Pichler pay penalties of $50,000 and $10,000 respectively.

40    The applicants submit that these penalties should be paid to the first applicant, in accordance with the ordinary rule that penalties are paid to those who apply for them, citing Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336 at 353-354 [101]-[102] (Tracey, Barker and Katzmann JJ). As the first applicant has prosecuted this case on behalf of both Mr Hes and itself, there is no reason to deny it the benefit of the penalties awarded: see, eg, United Voice v Lloyds Services ACT [2017] FCA 1007 at [19] (Jagot J).

Associate:    

Dated:    14 September 2020