FEDERAL COURT OF AUSTRALIA

Willis Brothers Installations (Qld) Pty Ltd v Ruttley [2023] FCA 1147

ORDERS

THE COURT ORDERS THAT:

1.    The orders of the primary judge made on 4 November 2022 be set aside.

2.    The Federal Court of Australia determine the question of pecuniary penalty.

3.    Pursuant to s 546 of the Fair Work Act 2009 (Cth), the appellant shall pay a pecuniary penalty of $47,250.00 for the First and Third Contraventions set out in the declarations of the primary judge made on 9 June 2022.

4.    Pursuant to s 546 of the Fair Work Act 2009 (Cth), the respondent shall pay a pecuniary penalty of $34,980.00 for the Second Contravention set out in the declarations made by the primary judge on 9 June 2022.

5.    Pursuant to s 564(3), both penalties, totalling $82,230.00, shall be paid directly to the respondent within 28 days of the date of these orders.

6.    The appellant shall pay interest on any part of the $82,230.00 that remains outstanding after the expiration of 28 days from the date of these orders.

7.    The sum of $75,600.00 paid into the trust account of the appellant’s legal representative, K&L Gates, be released.

8.    There be no order as to costs.

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

REASONS FOR JUDGMENT

MEAGHER J

INTRODUCTION

1    By a notice of appeal filed on 1 December 2022, the appellant, Willis Brothers Installations (QLD) (Willis Bros), appeals from a judgment of the Federal Circuit and Family Court of Australia (FCFCoA) handed down on 4 November 2022, which imposed pecuniary penalties and interest on Willis Bros due to contraventions of the Fair Work Act 2009 (Cth): Ruttley v Willis Brothers Installation (Qld) Pty Ltd [2022] FedCFamC2G 919 (Judge Tonkin) (Penalty Judgment).

2    The grounds of appeal are as follows:

1.    The primary Judge erred in Ruttley v Willis Brothers Installation (Qld) Pty Ltd [2022] FedCFam2G 919 (the Penalty Decision) at [38], by failing to:

a.    consider the correct declared contravention, in relation to the first contravention, when determining the appropriate single penalty to impose for the first and second contraventions.

Particulars

In Ruttley v Willis Brothers Installation (Qld) Pty Ltd [2022] FedCFamC2G 430 it was determined and/or declared that the Respondent contravened:

i.    s 351(1) of the Fair Work Act 2009 (FW Act) in that the Respondent took adverse action by terminating the Applicant’s employment because he was a person with a physical disability (first contravention); and

ii.    s 340 of the FW Act in that the Respondent took adverse action in injuring the applicant in his employment because the applicant exercised his workplace right by making a worker’s compensation claim (second contravention).

2.    The primary Judge erred by:

a.    imposing a double penalty for the same ‘conduct’ or ‘particular conduct’ in relation to the first contravention and the third contravention; and/or in the alternative

b.    failing to make the necessary adjustments to the penalties awarded to avoid a double penalty in relation to the first contravention and the third contravention; and/or in the alternative

c.    failing to apply section 556 of the Fair Work Act 2009 (Cth).

Particulars

In Ruttley v Willis Brothers Installation (Qld) Pty Ltd [2022] FedCFamC2G 430:

i.    it was further determined and/or declared that the Respondent contravened s 340 of the FW Act in that the Respondent took adverse action by terminating the Applicant’s employment because he exercised a workplace right to make an inquiry in relation to his employment (third contravention);

iii.    the first contravention and the third contravention involve the same conduct, or particular conduct, the termination of the Applicant's employment.

3.    As a result of the errors in Grounds 1 and 2 the primary Judge erred in the Penalty Decision by imposing penalties that were manifestly excessive.

3    Ground one was not pressed at hearing. For the reasons that follow, grounds two and three are made out. I have therefore reconsidered the appropriate pecuniary penalty and ordered a total penalty of $82,230.00.

LEGISLATIVE SCHEME

4    Pursuant to s 546 of the Fair Work Act 2009 (Cth), the Court has the discretion to order that a person pay a pecuniary penalty it deems appropriate in respect of a contravention of a civil remedy provision. By reference to s 539 of the Act, both s 340(1) and s 351 the Act are civil remedy provisions.

5    Pursuant to s 546(2)(b) of the Act, the pecuniary penalty imposed for each contravention must not exceed five times the maximum number of penalty units referred to in the table of s 539(2). At the time of the contraventions, a penalty unit was worth $210.00. For contraventions under both ss 340(1) and 351, the maximum penalty is 60 units, therefore the pecuniary penalty cannot exceed 300 penalty units, which equates to $63,600 for each separate contravention (the maximum).

6    Section 556 of the Act provides that a person must not be ordered to pay a pecuniary penalty under a civil penalty provision in relation to particular conduct which has been subject to some other Commonwealth law.

DECISION OF THE PRIMARY JUDGE

7    On 9 June 2022, the primary judge handed down judgment which determined the substantive claim of adverse action and contraventions of the Act: Ruttley v Willis Brothers Installation (Qld) Pty Ltd [2022] FedCFamC2G 430 (Substantive Judgment). The Penalty Judgment was handed down on 4 November 2022. Willis Bros appeals only from the Penalty Judgment. The factual findings in the Substantive Judgment remain undisturbed and are adopted for the purposes of this judgment, however for context only it is necessary to set out aspects of the Substantive Judgment.

8    The respondent in this proceeding (who was the applicant before the FCFCoA), Mr Timothy Ruttley, sought compensation and pecuniary penalties against Willis Bros (who was the respondent before the FCFCoA) for breach of the general protections provisions of the Act, which resulted in the termination of his employment.

9    Willis Bros was established by Mr Duncan Willis and Mr Justin Willis in 1997 and carries on the business of manufacturing and installing stone benchtops. Willis Bros is one of six Willis Group companies. Mr Ruttley, in July 1997, at the age of 18, commenced employment with Willis Bros and was promoted to production and installation manager in 2007. Mr Ruttley was the Queensland Building and Construction Commission (QBCC) license nominee for Willis Bros. By 2013 Mr Ruttley had acquired a 17% interest in Willis Bros, and his brother, Mr Simon Ruttley, who had also worked in the business, had acquired a 30% interest. Mr Willis was the majority shareholder with 53% interest.

10    Between July 2019 and January 2020, a number of events occurred at the workplace, which ultimately resulted in the termination of Mr Ruttley’s employment. This is extensively detailed in the Substantive Judgment from [30]-[199], and is summarised at [210] as follows:

a.    On 20 November 2018 Timothy was diagnosed with lymph node silicosis. Duncan formed a view that he would not be able to continue as production and installation manager for Willis Bros due to his physical disability. Persons diagnosed with silicosis were unable to complete stone masonry work and were not to be exposed to silica dust. Simon who was also diagnosed with silicosis had his employment terminated in July 2019. He had refused to transfer his interest in Willis Bros to Duncan.

b.    In January 2019 Timothy made a workers compensation claim and WorkCover accepted the claim for compensation in relation to his silicosis diagnosis.

c.    In September 2019 Duncan attempted to obtain the QBCC nominee supervisor licence which was rejected. He became increasingly aggressive and intimidating towards Timothy but at that stage needed Timothy to continue to operate the production and installation side of the business.

d.    Sometime in November 2019 Duncan requested Justin return to work for Willis Bros. He had the requisite stone masonry qualifications and he obtained a QBCC nominee supervisor licence. At that point Timothy was no longer needed to continue to operate the production and installation side of the business. Justin was appointed a director of Willis Bros on 16 December 2019.

e.    In December 2019 Duncan made an offer to buy out Timothy’s interest in Willis Bros which was not accepted. Duncan acted on his intention to terminate Timothy’s employment on the basis that he remained a liability to the business because he was diagnosed with silicosis.

f.    On 14 January 2020 Duncan recalled Timothy’s two vehicles, diverted his phone and cancelled his fuel card leaving Timothy, his wife and children without a vehicle.

g.    Timothy forwarded the respondent a medical certificate which stated he was suffering from workplace stress from 14 January 2020 to 14 February 2020 and would be unfit for work.

h.    On 13 February 2020 Timothy forwarded the respondent a medical certificate which stated he was suffering from a medical condition between 13 February 2020 and 28 April 2020 and would be unfit for work.

i.    Whilst Timothy was on personal (sick) leave on 21 February 2020 Duncan ceased paying Timothy his QBCC allowance reducing the amount Timothy received in wages.

j.    On 16 March 2020 Duncan ceased paying Timothy his wages (or personal leave entitlements) notwithstanding Timothy had provided a medical certificate indicating he was unfit to work until 20 May 2020.

k.    On 6 and 9 April and 21 April 2020 Duncan ignored Timothy’s request when he made an inquiry about his personal and annual leave entitlements.

l.    On 6 April 2020 Duncan moved a resolution to remove Timothy as director of Willis Bros.

m.    On 28 April 2020 Timothy forwarded the respondent a medical certificate which stated he was suffering from a medical condition between 28 April 2020 and 30 May 2020 and would be unfit for work.

n.    On 30 April 2020 Timothy was removed as a director of Willis Bros.

o.    On 11 May 2020 Duncan terminated Timothy’s employment on the basis that he had exhausted his leave entitlements.

11    Mr Ruttley sought relief for the following instances of adverse action:

1.    Treating the applicant less favourably than other employees of the respondent due to his physical and mental disability despite the applicant’s diagnosis not inherently preventing him from performing his duties as an employee of the respondent there being no medical concerns to substantiate the respondent’s concerns about the applicant’s alleged incapacity;

2.    Unilaterally reducing the applicant’s wage, cancelling the applicant’s fuel card, re-directing the applicant’s mobile phone all of which formed part of the applicant’s salary package;

3.    Failing to pay the applicant his wage whilst on personal leave from 26 March 2020;

4.    Failing to pay the applicant’s accrued leave entitlements on termination of employment; and

5.    Terminating his employment by letter dated 11 May 2020, which (notwithstanding the applicant’s medical certificate stating he was suffering from workplace stress) the reason given for termination was “the excessive period of leave and your absence is not based on Workers Compensation and Rehabilitation Act 2003 as it is not a work-related incident.”

(Emphasis in original)

12    At [220] the primary judge found that Willis Bros contravened s 351(1) of the Act by deciding that Mr Ruttley would be unable to continue working as production and installation manager, forming an intention to remove Mr Ruttley from the business and acting upon that intention, in circumstances where there was no evidence that he was unable to perform the functions of his job (First Contravention).

13    At [221] the primary judge found that Willis Bros contravened s 340 of the Act by taking adverse action against Mr Ruttley by injuring him in his employment by removing his work vehicle, mobile phone and fuel card, as well as suspending his QBCC allowance and failing to pay his leave entitlements when he was on personal leave from 16 March 2020, and ultimately terminating him from employment because he exercised the workplace right to make a workers compensation claim (Second Contravention).

14    Also, at [221] the primary judge found that Willis Bros contravened s 340 of the Act by taking adverse action against Mr Ruttley because he exercised a workplace right in making a complaint or inquiry about the failure to pay his leave entitlements, which led to the termination of his employment (Third Contravention).

15    At [226], the primary judge awarded compensation in the amount of $142,631.00 comprised of the following:

(1)    $26,201 for unpaid personal leave between 26 March 2020 - 11 May 2020;

(2)    $14,972 for unpaid accrued personal and annual leave;

(3)    $56,710 for loss of income between 11 May 2020 - 25 August 2020;

(4)    $44,748 being the loss of income from 26 August 2020 - 5 May 2020 being the difference between the salary of his new job and the salary working for the appellant; and

16    At [227], the primary judge awarded $20,000 in damages for distress, hurt and humiliation.

17    The primary judge made the following declarations:

1.    The Respondent Willis Bros Installations (Qld) Pty Ltd contravened:

a.    section 351(1) of the Fair Work Act 2009 (Cth) in that the Respondent took adverse action by terminating the applicant’s employment because he was a person with a physical disability;

b.    section 340 of the Fair Work Act 2009 (Cth) in that the Respondent took adverse action in injuring the applicant in his employment because the applicant exercised his workplace right by making a worker’s compensation claim under the Worker’s Compensation and Rehabilitation Act 2003 (Cth); and

c.    section 340 of the Fair Work Act 2009 (FW Act) in that the Respondent took adverse action by terminating the applicant’s employment because he exercised a workplace right to make an inquiry in relation to his employment.

18    In the Penalty Decision at [32] the primary judge made the following observation:

Notwithstanding his loyalty and commitment to the business following the applicant’s silicosis diagnosis in November 2018 the respondent through Duncan Willis engaged in a course of conduct over the ensuing period treating the applicant less favourably than other employees because he suffered from a physical disability. Duncan determined that the applicant would not be able to continue to work as production and installation manager for the business and set out on a course to remove him from the business notwithstanding that at the time of diagnosis there was no evidence that the applicant was unable to perform the work required of him.

19    The primary judge at [38] stated:

With respect to the respondent’s breach of section 340 of the FW Act the applicant had a workplace right under a workplace law to make a complaint or inquiry in relation to his employment. I found that the respondent contravened section 340 of the FW Act and took adverse action against the applicant in terminating his employment because the applicant exercised a workplace rights [sic] by making a worker’s compensation claim under the Worker’s Compensation and Rehabilitation Act 2003 (Cth) for an injury sustained in the course of his employment which was accepted by WorkCover. Following the lodgement of that claim and acceptance by WorkCover in January 2019 the respondent formed an intention to remove the applicant from the business and acted upon that intention in the manner discussed above. I accept the respondent’s submission that there is some overlap between the two contraventions and a single penalty ought to be imposed. With respect to the first and second contraventions I am satisfied that that the appropriate penalty is 65% of the maximum penalty or the sum of $44,100.

(Emphasis in original)

20    From [39]-[41] the primary judge considered the circumstances which led to the Third Declaration being made, and concluded at [42]:

The respondent’s failure to maintain a record of the applicant’s leave entitlements also prevented the Court from accurately calculating the precise leave entitlements owing to the applicant with the Court having to assess those entitlements against other available evidence. I accept the applicant’s submission that the respondent took the approach in failing to keep accurate employee business records as simply “the cost of doing business.” I am satisfied that the appropriate penalty to be imposed should be 50% of the maximum or $31,500.

(Emphasis in original)

21    At [43] the primary judge was satisfied that the appropriate penalty for all three of the contraventions should be $75,600, and at [46] that the penalty should be paid to Mr Ruttley.

CONSIDERATION

22    As the appeal is concerned with the imposition of penalties under s 546 of the Act, which is a discretionary provision, the Court’s jurisdiction to interfere with the judgment if an error has occurred is set out in House v R (1936) 55 CLR 499 at 504-505 (Dixon, Evatt and McTiernan JJ) as follows:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

Ground two

23    By ground two, Willis Bros contended that the primary judge imposed a double penalty in relation to the first and third contravention, which Willis Bros submitted constitute the same "conduct" or "particular conduct". This is evidenced in the Penalty Judgment [32], which Willis Bros submitted is suggestive of a course of conduct.

24    Mr Ruttley conceded that the primary judge penalised Willis Bros twice for the same conduct, namely for terminating Mr Ruttley’s employment, contrary to the requirements of s 556 of the Act.

25    This concession was properly made. At [38] of the Penalty Judgment, the primary judge imposed a penalty in the sum of $44,100 by reason of the Second Contravention, namely taking adverse action against Mr Ruttley in terminating his employment because he exercised the workplace right by making a workers compensation claim. The penalty also encompassed the First Contravention, namely taking adverse action by terminating Mr Ruttley’s employment because he has a physical disability. The primary judge then considered the appropriate penalty for the Third Contravention, being that Willis Bros took adverse action against Mr Ruttley in terminating his employment because he exercised the workplace right to inquire or complain about the failure to pay his leave entitlements, and imposed a further penalty of $31,500 (at [42]).

26    It is clear that the primary judge considered the termination of employment under each of the two penalties imposed. The primary judge, in considering the totality principle, was satisfied that both penalties were appropriate for the three contraventions, and no regard was had to s 556 of the Act. This error enlivens the Court’s jurisdiction to interfere with the primary judge’s judgment in accordance with the principles in House v R.

Ground three

27    By ground three, Willis Bros contended that the primary judge erred in imposing a final penalty of $75,600 as it is manifestly excessive, by reason of the error in ground two.

28    The parties were not in agreement as to whether the primary judge imposed a penalty for the Second Contravention. Willis Bros contended that in the Penalty Judgment the Second Contravention was included in the first penalty of $44,100. According to Willis Bros, so much is made clear by paragraphs [32]-[36] of the Penalty Judgement. Those paragraphs detail the actions that Mr Willis took including removing Mr Ruttley’s work vehicle, mobile phone and fuel card, as well as suspending his QBCC allowance and failing to pay his leave entitlements, which the primary judge found to be adverse action the subject of the Second Contravention. Willis Bros submitted therefore that the primary judge imposed a penalty of $44,100 for the First and Second Contravention from which it can be reasonably deduced that the penalty for the Second Contravention was a sum of $12,600 by reason of the penalty imposed for the Third Contravention, which comprised the same conduct as the First Contravention. Willis Bros therefore submitted that the total penalty should be no more than $44,100 for all three contraventions.

29    Mr Ruttley submitted that the primary judge failed to impose a penalty for the Second Contravention, and therefore the total penalty is not manifestly excessive as it does not incorporate a penalty for the Second Contravention. Mr Ruttley submitted that he contended for a penalty of $33,600 for the Second Contravention, therefore the total penalty should be $80,850.

30    Putting aside what the correct total penalty should be, I prefer Willis Bros interpretation of the Penalty Judgment in relation to this ground of review. Paragraphs [32]-[38] of the Penalty Judgment clearly comprise a consideration of the penalty that was imposed at [38], being $44,100. In doing so, at [32], the primary judge commenced by discussing the First Contravention, being the decision Mr Willis made that Mr Ruttley was unable to continue performing his duties as production and installation manager, and thereby engaged in a course of conduct to remove him from the business. At [34]-[35], the primary judge discussed the removal of Mr Ruttley’s workplace vehicle, mobile phone and fuel card, and the cessation of payment of his leave entitlements, which are all actions relevant to the Second Contravention. At [36], the primary judge referenced Willis Bros unlawfully terminating Mr Ruttley’s employment in breach of s 351(1) of the Act, which is relevant to the First Contravention. Then, at [38], the primary judge concluded that "[w]ith respect to the first and second contraventions I am satisfied that that the appropriate penalty is 65% of the maximum penalty or the sum of $44,100" (emphasis added).  

31    In those circumstances, I agree that the primary judge erred in the assessment of the appropriate penalty, and such error is of the kind referred to in House v R. Accordingly, it is necessary to reconsider the correct penalty to impose.

Reconsideration of penalty

32    In re-exercising the discretion to impose penalties, I must consider the undisturbed factual findings of the primary judge in the Substantive Judgment but reach my own view as to the appropriate penalty: Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243; [2018] FCAFC 73 at [246].

33    The only purpose for imposing a penalty is deterrence, both specific to the contravening party and generally to any other who may think to contravene the Act: Australian Building and Construction Commission v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [15]-[16] (Kiefel CJ, Gageler , Keane , Gordon , Steward and Gleeson JJ).

34    As for the discretion to impose penalties, the High Court in Pattinson said at [10] and [46]-[47]:

The Full Court’s critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others.

…

It does not follow, as the Full Court suggested and as the CFMMEU argued in this Court, from the rejection of the Full Court’s “notion of proportionality” that s 546 must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender. It is important to recall that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a “one-off” result of inadvertence by the contravenor rather than the latest instance of the contravenor’s pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions.

The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors of the kind adverted to by French J in CSR. For example, where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.

(Footnotes omitted)

35    As adopted by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 at [36], the approach required when determining an appropriate penalty is as follows:

(1)    Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.

(2)    Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.

(3)    Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.

(4)    Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.

(5)    Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].

36    As for the relevant factors that inform the exercise of discretion, the plurality in Pattinson distilled at [18]-[19]:

In CSR, French J listed several factors which informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value:

The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:

1.    The nature and extent of the contravening conduct.

2.    The amount of loss or damage caused.

3.    The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.    The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

8.    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.”

It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention”27 as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case.

(Footnotes omitted)

37    The primary judge categorised the contraventions as the First, Second and Third Contravention. It is not contentious that these contraventions cannot be grouped as a single contravention in accordance with s 557 of the Act, but that they can be grouped together as a single course of conduct at common law.

38    Willis Bros contended that all the contraventions should be viewed as a continuous course of conduct, by reason of Mr Willis’ determination that Mr Ruttley was unable to continue his role due to his silicosis diagnosis, without any evidence of this being so, which led to injury (Second Contravention), and ultimately the termination of his employment (First and Third Contravention). Mr Ruttley contended that the First and Third Contravention should be grouped together as both are concerned with the adverse action of terminating his employment. Mr Ruttley submitted that the First and Third Contraventions, and the Second Contravention are distinct in nature and time and should not be further grouped.

39    I am satisfied that the First and Third Contraventions concern the same conduct, namely the termination of employment, and therefore should be grouped together as a single course of conduct. The Second Contravention, however, is a distinct act. As found by the primary judge, Mr Willis formed the view that Mr Ruttley was unable to continue in his role by reason of his diagnosis of silicosis. Mr Willis then formed an intention to remove Mr Ruttley from the business and acted upon that intention. The act of forming the view that Mr Ruttley was unable to continue in his role, and the act of terminating his employment, are separate actions. While it is clear that the primary judge considered that Mr Willis formed a motive to terminate Mr Ruttley’s employment at the time of deciding that he was unable to continue in his role, the identification of motive is not sufficient to establish that the contraventions form a single course of conduct: Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 [2010] FCAFC 39 at [39] (Middleton and Gordon JJ).

40    I do not consider that Willis Bros would be penalised twice for the same conduct if the Second Contravention were treated as distinct from the First and Third Contraventions.

41    As for the appropriate penalty, Mr Ruttley submitted that a total of $47,250.00 (being 75% of the maximum) should be ordered with respect to the First and Third Contraventions. Mr Ruttley further submitted that $8,400.00 (being 40 penalty units) should be ordered for each of the actions taken by Mr Willis with respect to the Second Contravention, being:

(a)    Disconnecting Mr Ruttley’s work phone and cancelling his fuel card on 14 January 2020;

(b)    Suspending his QBCC allowance on 21 February 2020;

(c)    Requiring the return of his work vehicle on 3 March 2020; and

(d)    Failing to pay leave entitlements from 16 March 2020 while he was on personal leave.

42    That means that the total penalty for the Second Contravention would be $33,600.00 which Mr Ruttley submitted is reflective of the individual significance of each action, which had a material impact on him, and reflects that the cumulative effect was not so great as the effect of the termination of employment, which should attract a higher penalty.

43    Accordingly, Mr Ruttley submitted the total penalty for all the contraventions should be $80,850.00 without further reduction. The factors which he submitted are relevant, such that a high penalty is warranted, include:

    The contraventions were deliberate.

    The adverse action was not a "one off" event but formed a culmination of actions by Mr Willis over a period of months designed to remove him from the business.

    Mr Willis has shown no remorse, and Willis Bros’ director and CFO were prepared to lie at trial.

    Although Mr Ruttley was awarded compensation in the Substantive Judgment, due to the lack of record-keeping by Willis Bros, the primary judge was unable to identify the exact quantity of accrued sick and annual leave owing to Mr Ruttley. The primary judge awarded the equivalent of four weeks' pay in circumstances where her Honour accepted Mr Ruttley’s evidence but was unable to calculate outstanding entitlements, which he submitted is significantly likely to have undercompensated him.

    Mr Ruttley’s silicosis and mental illness were sustained during and because of his longstanding and loyal employment, in circumstances where he was first injured at work (by reason of his silicosis diagnosis) and secondly punished for that injury which in turn caused his mental illness.

44    Willis Bros submitted that, if all the contraventions are found to constitute a single course of conduct, the appropriate penalty is $25,200 (being 40% of the maximum). In the alternative, Willis Bros submitted that as the First and Third Contraventions comprise the same conduct, an appropriate penalty is $25,200 (being 40% of the maximum), and for the Second Contravention the appropriate penalty is $18,900 (being 30% of the maximum).

45    Willis Bros submitted the following factors are relevant to the consideration of the appropriate penalty:

    Mr Ruttley and Mr Willis worked together for approximately 20 years, and Mr Ruttley is still a shareholder of the company, not just an employee. There was no animosity between the parties before November 2018.

    Mr Ruttley expressed concern about the ramifications to Willis Bros, namely the potential financial impact, due to the number of employees who were diagnosed with silicosis.

    Willis Bros experienced a loss in the 2018/2019 financial year due to silicosis within the industry, which continued throughout 2018 and 2019. Mr Ruttley agreed that during that period there were a number of redundancies in the company and that financial pressure might have dictated the disposal of company assets, such as vehicles.

    The loss suffered by Mr Ruttley is minimal, in circumstances where he has been awarded compensation and damages, and secured new employment from 26 August 2020, having not sought employment elsewhere, other than with his brother Simon, and not until approximately 3-4 weeks before commencing his new role. Further, Mr Ruttley conceded that due to his silicosis diagnosis he would be unable to work for Willis Bros past 5 May 2021.

    Willis Bros has not engaged in similar conduct previously, therefore the need for deterrence is low.

    Willis Bros is a relatively small business, employing 16 employees. Willis Group has 22 employees.

46    The conduct of Mr Willis was grave. Indeed, the primary judge described it as "egregious and unjust". I agree with that characterisation.

47    As is clear in Pattinson at [80] (Edelman J), a penalty is not to be imposed based on what the contravening party "deserves" or what "fits the contravention", the seriousness of the conduct is only relevant in determining what penalty is necessary to achieve the object of deterrence. As such, a large penalty can be imposed for a somewhat minor offence, and a small penalty could be appropriate for a serious offence based on what is considered necessary to deter: Pattinson at [75]-[79] (Edelman J).

48    In Construction, Forestry, Maritime, Mining and Energy Union v Richard Crookes Constructions Pty Ltd [2022] FCA 992, Wigney J observed at [164]:

A contravention which is deliberate, concealed and carried out by senior management is likely in many cases to suggest that a higher penalty is necessary to provide effective deterrence, both specific and general: see, for example, Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR ¶40-091 at 17, 896; Pattinson at [57]. The fact that a contravention was deliberate, concealed and carried out by senior management does not, however, indicate that a higher penalty is necessary simply because such a penalty is necessary to ensure that the contravener gets his, her or its “just deserts”.

49    The central consideration is to ensure that the penalty imposed "is not such as to be regarded by [the] offender or others as an acceptable cost of doing business": Pattinson at [17] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). Therefore, consideration must be had as to what penalty is sufficient to discourage non-compliance with the Act by Willis Bros, and by others who might engage in similar conduct in the future.

50    It is relevant to have regard to the sections of the Act which were contravened. Section 340 is concerned with ensuring that the rights of workers are protected. The provision is breached where first, a person has a workplace right, or has or has not exercised, proposed to exercise or not to exercise, or was prevented from exercising a workplace right; second, conduct occurred against that person that constitutes adverse action; and third, the adverse action was taken because the person has a workplace right, or exercised or has not exercised, proposed to exercise or not to exercise a workplace right.

51    Section 351 is concerned with ensuring that an employee is not subject to discrimination in the workplace. It is breached where first, an employer takes adverse action against an employee; and second, where that adverse action was based on, inter alia, physical or mental disability.

52    The importance of both provisions cannot be understated. They are enshrined in the legislation to protect the rights of employees and prevent them from being subject to discrimination. Accordingly, I find that breaching these provisions is serious, and is likely to attract a higher penalty to achieve effective deterrence.

53    The primary judge found that Mr Willis, the majority shareholder and managing director of Willis Group, although not a director of Willis Bros since 2012, was the controlling mind behind Willis Bros (Substantive Judgment at [209]). Mr Willis made the decisions which led to the contraventions under the Act. The conduct, having been undertaken by senior management, suggests that a higher penalty should be imposed to achieve effective deterrence.

54    Furthermore, the conduct of Mr Willis was found to be deliberate which again suggests that a higher penalty is necessary to achieve effective deterrence.

55    It can be accepted that the conduct occurred in circumstances where the stone and masonry industry was under particular strain because a number of employees, not only within Willis Bros but nation-wide, were diagnosed with silicosis. I accept that this would have caused heightened tension for senior management. However, it is manifestly clear that the actions taken towards Mr Ruttley were ill-conceived, as there was no evidence at that time that warranted a decision by Mr Willis that Mr Ruttley was unable to continue his duties.

56    I also accept that Willis Bros has not previously contravened the Act, which weighs against the need for a high penalty, and that it is a relatively small company that has experienced financial loss by reason of silicosis in the industry.

57    On the other hand, there is no evidence of any remorse or apology from Mr Willis which might indicate that he or Willis Bros is unlikely to repeat the conduct in the future. While the absence of contrition is not an aggravating factor leading to an increase in a penalty, it certainly does not assist in it being tempered. BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336 at [10] (Kiefel J, as her Honour then was).

58    As to Mr Ruttley being awarded compensation and damages, first the compensation award was unable to be accurately calculated due to Willis Bros lack of record keeping. Second, the award of damages further demonstrates the seriousness of conduct committed by Mr Willis. I do not regard these awards as assisting in lowering the pecuniary penalty to be imposed, such that it mitigates the need for deterrence.  

59    Overall, the balance of the considerations suggest that relatively substantial pecuniary penalties are warranted to achieve specific and general deterrence. I consider the following penalties to be appropriate in these circumstances:

(1)    A pecuniary penalty of $47,250.00 (being 75% of the maximum) in respect of the First and Third Contravention. This was the most serious contravention of, objectively, important provisions of the Act.

(2)    A pecuniary penalty of $34,980 (being 55% of the maximum) in respect of the Second Contravention. This contravention, while somewhat less serious, still comprised reckless and ill-conceived actions by senior management in breach of an objectively important provision of the Act.

60    Thus, the pecuniary penalties imposed total $82,230.00. In applying the principle of totality, the total penalty is not oppressive or disproportionate to the need to achieve the object of deterrence. The balance of factors discussed above warrant the imposition of that penalty, in circumstances where the object of specific and general deterrence is the ultimate consideration.

61    Section 546(3) of the Act provides that the Court can order that a pecuniary penalty, or part of the penalty, be paid to the Commonwealth, a particular organisation, or a particular person. Mr Ruttley submitted that, in accordance with Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336; [2016] FCAFC 4 (Tracey, Barker and Katzmann JJ), the penalty should be awarded to him.

62    At [46] of the Penalty Judgment, the primary judge decided the following:

I respectfully adopt what was said in Sayed (supra) that policy considerations speak loudly in the current case to justify the payment of the penalty to the individual affected by the contraventions who commenced and maintained the current proceedings. Had he not pursued the matter is it unlikely that the respondent would have been pursued. The [appellant] would have escaped sanctions for deliberately contravening the FW Act the outcome of which sends a message to other employers who chose to contravene the Act. Further the [respondent] would not have received compensation for the unlawful termination of his employment and distress caused to the applicant by the respondent’s conduct in removing him from the business.

63    Willis Bros took no issue with this aspect of the Penalty Judgment. Accordingly, I respectfully agree with, and adopt the reasoning of, the primary judge in that regard. The pecuniary penalty ought to be paid to Mr Ruttley.

CONCLUSION

64    The orders of the primary judge will be set aside, and in lieu thereof orders will be made for pecuniary penalties totalling $82,230.00 in respect of the contraventions. The penalty should be paid to Mr Ruttley within 28 days of the date of these orders. Willis Bros must pay interest on any part of the penalty that remains outstanding after the expiration of 28 days from the date of these orders. There will be no order as to costs in accordance with s 570 of the Act.

Associate:

Dated:    27 September 2023