Federal Court of Australia

Coal Mining Industry (Long Service Leave Funding) Corporation v Hitachi Construction Machinery (Australia) Pty Ltd (Penalty) [2023] FCA 1187

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 13A of the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Cth), s 49A of the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) and Pt 4 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth), the respondent pay to the Commonwealth a pecuniary penalty of $40,000 within 28 days.

2.    The respondent pay the applicant’s costs of both the substantive and penalty proceedings as agreed or assessed.

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

REASONS FOR JUDGMENT

RAPER J:

Introduction

1    Where a civil penalty provision under the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Cth) (Collection Act) is breached, the applicant (Coal LSL) is authorised to apply for civil penalties to be awarded, by virtue of the operation of Pt 4 of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (the Regulatory Powers Act).

2    On 8 February 2023, I delivered my reasons for judgment in Coal Mining Industry (Long Service Leave Funding) Corporation v Hitachi Construction Machinery (Australia) Pty Ltd [2023] FCA 68 (Liability Judgment). Coal LSL, a federal statutory corporation which administers the Coal Mining Industry (Long Service Leave) scheme (LSL scheme), claimed that it was entitled to declaratory relief in respect of four employees of the respondent (Hitachi), and the ordering of pecuniary penalties against Hitachi by reason of it having failed to pay the relevant levy associated with the accrual of long service leave to Coal LSL in respect of four of Hitachi’s employees.

3    In the Liability Judgment, I held that Messrs Benjamin Garland, Brenton Gee, Brady Stair and Graeme Cooper are and were (as the case may be) “eligible employees” within the meaning of s 4(b) of the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) (Administration Act). As eligible employees, they were each an employee who is or was during the relevant period employed in the black coal mining industry, whose duties are or were carried out at or about a place where black coal is mined and are (or were) directly connected with the day to day operation of a black coal mine.

4    On 3 March 2023, I made declarations in a form agreed between the parties to the effect that:

(a)    the four employees were “eligible employees” for the time periods stated in those declarations, and Hitachi was required to pay levy for each month during those time periods; and

(b)    Hitachi had contravened, and continued to contravene, ss 5(1) and 10(1) of the Collection Act for each month that Hitachi employed one or more of the four employees but failed to make a monthly return, and for each financial year where Coal LSL failed to give a report.

5    The parties subsequently conferred and agreed upon the quantum of levy and additional levy payable with respect the four employees pursuant to ss 4 and 6 of the Collection Act and s 6 of the Coal Mining Industry (Long Service Leave) Payroll Levy Act 1992 (Cth). I then made orders as to levy on 12 April 2023 and additional levy on 13 April 2023. Those orders were varied on 1 May 2023, and the 1 May 2023 orders set the final levy and additional levy amounts.

6    The issues that remain for determination in this judgment are:

(1)    Whether Hitachi is not liable to have a civil penalty order made against it because it made a “mistake of fact” within the meaning of s 95 of the Regulatory Powers Act.

(2)    Assuming Hitachi is liable, should a single penalty be applied by reason of the operation of the statutory double jeopardy provision in s 84(2) of the Regulatory Powers Act?

(3)    What is the appropriate penalty? Coal LSL submitted that it should be at the mid-to-high range, being $30,000 (of the maximum of $55,000) for each contravention. Hitachi submitted no penalty should be awarded or, if one should, it should be in the low range, in the order of 5–15% of the maximum ($2,750–$8,250).

(4)    Whether the award of Coal LSL’s costs in the substantive proceedings should be reduced by 20% by reason of Coal LSL’s lack of success in establishing that the relevant employees were “eligible employees” under limb (a) by reason of Hitachi not being “an employer engaged in the black coal mining industry”.

7    For the reasons which follow, I am not satisfied that Hitachi has proven on the evidence that it made a “mistake of fact” such that it is not liable for a penalty. I am of the view that s 84(2) does not apply: The relevant conduct giving rise to each of the contraventions was different. The appropriate penalty in the circumstances is $20,000 for each contravention. Coal LSL is entitled to its costs of the proceedings without reduction.

Penalties

Principles

8    Each civil penalty provision of the Collection Act is enforceable under Pt 4 of the Regulatory Powers Act. Coal LSL, on behalf of the Commonwealth, is an authorised applicant in relation to the civil penalty provisions of the Collection Act.

9    A pecuniary penalty is a debt payable to the Commonwealth: Regulatory Powers Act, s 83(1). Being satisfied that Hitachi has contravened ss 5(1) and 10(1) of the Collection Act, the Court may order Hitachi to pay such penalty as the Court deems appropriate: Regulatory Powers Act, s 82(3). This power is subject to a statutory maximum with respect to body corporates of five times the pecuniary penalty specified for the civil penalty provision: Regulatory Powers Act, s 82(5)(a).

10    Each of the provisions that Hitachi has been found to have contravened provides for a civil penalty of 40 penalty units: Collection Act, ss 5(1) and 10(1). The maximum penalty for each provision is therefore 200 penalty units: Regulatory Powers Act, s 82(5)(a).

11    The parties agreed that, to the extent that penalties could be imposed on Hitachi, the penalty ordered should be with respect to the period commencing 20 August 2015, being six years before the proceedings were commenced (on 20 August 2021). This was because s 82(2) of the Regulatory Powers Act imposes a six-year time limit on the making of an application for civil penalty orders.

12    The contravening conduct covers a number of periods, over which there were changes to the maximum penalty. The value of the maximum penalty over the period from 20 August 2015 was $36,000 (31 July 2015 to 30 June 2017), $42,000 (1 July 2017 to 30 June 2020), $44,400 (1 July 2020 to 31 December 2022), and $55,000 (on or after 1 January 2023) There was no dispute between the parties that the proper approach in these circumstances is to take account of the different penalties that applied across the various periods during which the contravening conduct took place: Registered Organisations Commissioner v Australian Nursing and Midwifery Federation (No 2) [2018] FCA 2004 at [124]–[125] per Barker J; Registered Organisations Commissioner v Australian Workers’ Union [2019] FCA 1852 at [182] per Mortimer J.

Penalty factors

13    Section 82(6) of the Regulatory Powers Act mandates factors which the Court must take into account:

82 Civil penalty orders

…

(6)    In determining the pecuniary penalty, the court must take into account all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered because of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.

14    Section 13A(5) of the Collection Act additionally provides that, in determining the pecuniary penalty to apply to a person who is a body corporate, the Court must take into account:

(a)    the level of the employees, officers or agents of the body corporate involved in the contravention; and

(b)    whether the body corporate exercised due diligence to avoid the contravention; and

(c)    whether the body corporate had a corporate culture conducive to compliance.

15    The factors specified in ss 82(6) of the Regulatory Powers Act and 13A(5) of the Collection Act are mandatory considerations, but are not exhaustive of the matters that this Court may take into account in determining the appropriate penalty.

16    In their submissions, both parties referred to the non-exhaustive list of factors recited by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [14]. This list has been referred to with approval in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [60] per Graham J, [88]–[89] per Buchanan J and Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170; 171 FCR 357 at [57] per Branson and Lander JJ. Coal LSL also referred me to the factors identified by Dowsett, Greenwood and Wigney JJ in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 at [102]–[104] (ABCC v CFMEU):

102    In general terms, the factors that may be relevant when fixing a pecuniary penalty may conveniently be categorised according to whether they relate to the objective nature and seriousness of the offending conduct, or concern the particular circumstances of the defendant in question.

103    The factors relating to the objective seriousness of the contravention include: the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.

104    The factors that concern the particular circumstances of the defendant, particularly where the defendant is a corporation, generally include: the size and financial position of the contravening company; whether the company has been found to have engaged in similar conduct in the past; whether the company has improved or modified its compliance systems since the contravention; whether the company (through its senior officers) has demonstrated contrition and remorse; whether the company had disgorged any profit or benefit received as a result of the contravention, or made reparation; whether the company has cooperated with and assisted the relevant regulatory authority in the investigation and prosecution of the contravention; and whether the company has suffered any extra-curial punishment or detriment arising from the finding that it had contravened the law.

17    Hitachi, meanwhile, submitted that the overarching principles applicable to the exercise of the penalty-fixing discretion under the Fair Work Act 2009 (Cth) (FW Act) may be appropriately transposed, with necessary modification, to the discretion that arises under s 82(3) of the Regulatory Powers Act. In support of this approach, and by analogy, Hitachi referred me to O’Callaghan J’s decision in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The NewCold Picket Case) [2019] FCA 2038 at [11]–[13]. Hitachi also referred me to the factors listed in Beach J’s decision in Commissioner of Taxation v Balasubramaniyan [2022] FCA 374 at [93]:

Given the prefatory wording of s 82(6), let me now say something about other relevant but non-mandatory factors, which have been identified and applied in analogous civil penalty contexts. As to such non-mandatory factors, I set out a list of augmented French factors in ASIC v Westpac (No 3) at [49] and [50]:

The fixing of a pecuniary penalty involves the identification and balancing of all the factors relevant to the contravention and the circumstances of the defendant, and the making of a value judgment as to what is the appropriate penalty in light of the purposes and objects of a pecuniary penalty that I have just explained. Relevant factors include the following:

(a)    the extent to which the contravention was the result of deliberate or reckless conduct by the corporation, as opposed to negligence or carelessness;

(b)    the number of contraventions, the length of the period over which the contraventions occurred, and whether the contraventions comprised isolated conduct or were systematic;

(c)    the seniority of officers responsible for the contravention;

(d)    the capacity of the defendant to pay, but only in the sense that whilst the size of a corporation does not of itself justify a higher penalty than might otherwise be imposed, it may be relevant in determining the size of the pecuniary penalty that would operate as an effective specific deterrent;

(e)    the existence within the corporation of compliance systems, including provisions for and evidence of education and internal enforcement of such systems;

(f)    remedial and disciplinary steps taken after the contravention and directed to putting in place a compliance system or improving existing systems and disciplining officers responsible for the contravention;

(g)    whether the directors of the corporation were aware of the relevant facts and, if not, what processes were in place at the time or put in place after the contravention to ensure their awareness of such facts in the future;

(h)    any change in the composition of the board or senior managers since the contravention;

(i)    the degree of the corporation’s cooperation with the regulator, including any admission of an actual or attempted contravention;

(j)    the impact or consequences of the contravention on the market or innocent third parties;

(k)    the extent of any profit or benefit derived as a result of the contravention; and

(l)    whether the corporation has been found to have engaged in similar conduct in the past.

Moreover and importantly, attention must be given to the maximum penalty for the contravention. But if contravening conduct is not so grave as to warrant the imposition of the maximum penalty, I am bound to consider where the facts of the particular conduct lie on the spectrum that extends from the least serious instances of the offence to the worst category.

18    In applying factors such as those referred to by Tracey J in Kelly, this Court is to bear in mind the High Court’s statement in Australian Building and Construction Commission v Pattinson [2022] HCA 13; 274 CLR 450 at [19]:

It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” 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.)

19    Fixing a penalty involves a process of “intuitive or instinctive synthesis of all relevant factors”: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 at [6] per Allsop CJ; Australian Competition and Consumer Commisson v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [44] per Jagot, Yates and Bromwich JJ. In determining an appropriate penalty, the Court can have regard to prescribed maximum penalties. However, Pattinson at [10] (in the context of s 546(1) of the FW Act) held that these are not reserved for the most serious examples of misconduct. Instead, there must be “some reasonable relationship between the theoretical maximum and the final penalty imposed” (Reckitt Benckiser at [156], quoted in Pattinson at [10]), which “is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose” of the legislation of deterring future contraventions: Pattinson at [10].

The purpose of imposing a civil penalty

20    Both parties submitted that deterrence is the primary, if not sole, purpose of a civil penalty: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; Pattinson at [9], [15]–[16]. Neither party submitted that ordinary considerations of what is conceptionally proportional between conduct and sanction would be relevant in this case, because unlike the relevant statutory regime being considered in Pattinson, the mandatory statutory considerations (at s 82(6) of the Regulatory Powers Act) suggest otherwise. Given the position of the parties, I will approach my task applying the reasoning in Pattinson.

21    As a consequence, the appropriate penalty should deter future contraventions by the contravener (achieving specific deterrence) and, by example, other would-be contraveners (achieving general deterrence): Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at [62] per Keane CJ, Finn and Gilmour JJ; NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 at 292–3 per Burchett and Kiefel JJ; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157 at [116] per Keane, Nettle and Gordon JJ. Consistent with the purpose of deterring future contraventions, the penalty must be sufficient to eliminate in the mind of a putative contravener the prospect that contravention would pay (NW Frozen Foods at 295) or that the penalty could be “an acceptable cost of doing business” (Singtel Optus at [62], quoted in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [66] and Pattinson at [17]). It is important to send the message into the marketplace that contraventions of this kind are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) [2003] FCA 1369; 130 FCR 406 at [32] per Lindgren J; ABCC v CFMEU at [98].

22    The contravener’s financial capacity to pay the penalty is relevant when considering the extent to which a penalty achieves deterrence: Australian Competition and Consumer Commission v ABB Transmission & Distribution Ltd [2001] FCA 383; ATPR 41-815 at [13] per Finkelstein J. It is also relevant to consider its size and financial position: Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd (No 2) [2020] FCA 69; 377 ALR 55 at [220] per Lee J. Where a contravener is a distinct legal entity within a broader corporate structure, the Court will take account of that broader structure in assessing the extent to which the penalty achieves deterrence, including where the contravener is part of a much larger, internally coordinated and wealthy corporate group: AMP Financial Planning at [185]; Australian Securities and Investments Commission v MLC Nominees Pty Ltd [2020] FCA 1306; 147 ACSR 266 at [214] per Yates J; Australian Securities and Investments Commission v BT Funds Management Limited [2021] FCA 844 at [44] per Wheelahan J; Australian Securities and Investments Commission v Westpac Securities Administration Limited [2021] FCA 1008; 156 ACSR 614 at [84] per O’Bryan J. Where the Court is setting a penalty for a company that has “vast resources”, the sum required to achieve the object of deterrence will be larger: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA 265; 215 ALR 301 at [39] per Goldberg J.

Course of conduct and totality principles

23    Ordinarily, separate contraventions arising from separate acts attract the imposition of a separate penalty that is appropriate for each contravention: Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) [2014] FCA 27; 97 ACSR 412 at [197] per Jacobson J; Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243 at [227] per Allsop CJ, Middleton and Robertson JJ. However, in some cases it may be appropriate to group multiple contraventions together as part of “a single multi-faceted ‘course of conduct’”: Matcham at [197], quoting Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; 168 FCR 383 at [41], [49] per Stone and Buchanan JJ. Justices Middleton and Gordon in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 194 IR 461 at [39] described the principle as follows:

The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality.

(Emphasis in original.)

24    The interrelationship that characterises the course of conduct may be legal, in the sense that it arises from the elements of the contraventions, or factual, because of a temporal or geographic link or the presence of other circumstances compelling the conclusion that the contraventions arise out of substantially the same act, omission or occurrences: Royer v Western Australia [2009] WASCA 139; 197 A Crim R 319 at [22] per Owen JA.

25    Section 85 of the Regulatory Powers Act contains a form of course of conduct principle (see Balasubramaniyan at [102]) and provides:

85  Multiple contraventions

(1)    A relevant court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character.

Note:    For continuing contraventions of civil penalty provisions, see section 93.

(2)    However, the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate penalty were ordered for each of the contraventions.

26    The course of conduct principle is a discretionary tool of analysis that I am not compelled to use, and it is one which does not have paramountcy in the process of assessing an appropriate penalty: Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [24]–[25] per Beach J; Yazaki at [227].

27    The Court will generally have regard to the totality principle in determining the appropriate penalty for a large number of contraventions. This involves a final consideration of whether the aggregate sentence (being the cumulative total of the penalty) is just and appropriate and not excessive having regard to the totality of the relevant contravening conduct: Australian Securities and Investments Commission v Westpac Banking Corporation [2019] FCA 2147 at [272], [308] per Wigney J. It is not mandatory to apply the totality principle and, if applied, its application does not require any effective reduction in penalty: Cahill at [41]–[42] per Middleton and Gordon JJ; Mornington Inn at [58]–[59] per Stone and Buchanan JJ; Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59; 229 FCR 331 at [40]–[42] per Dowsett, Greenwood and Wigney JJ.

Consideration

Mistake of fact defence

28    For the reasons which follow, I am of the view that Hitachi has not proven its mistake of fact defence. Hitachi submitted that the Court is precluded from imposing any penalty by operation of s 95 of the Regulatory Powers Act. Hitachi submits that its contraventions on and after 20 August 2015 arose from its mistaken and reasonable belief about whether the relevant employees were “employed in the black coal mining industry” and whether their duties were “directly connected with the day to day operation of a black coal mine”.

29    Hitachi’s careful crafting of the alleged mistakes picks up precisely two of the three statutory components to be satisfied under limb (b) of the definition of “eligible employee” in s 4 of the Administration Act, which provides as follows:

(b)    an employee who is employed in the black coal mining industry, whose duties are carried out at or about a place where black coal is mined and are directly connected with the day to day operation of a black coal mine; or…

30    Its alleged mistaken belief about these two purported “facts” is submitted by Hitachi to establish that it was unaware that the relevant employees were “eligible employees” for the purposes of ss 5(1) and 10(1).

31    Section 95 of the Regulatory Powers Act is as follows:

95  Mistake of fact

(1)    A person is not liable to have a civil penalty order made against the person for a contravention of a civil penalty provision if:

(a)    at or before the time of the conduct constituting the contravention, the person:

(i)    considered whether or not facts existed; and

(ii)    was under a mistaken but reasonable belief about those facts; and

(b)    had those facts existed, the conduct would not have constituted a contravention of the civil penalty provision.

(2)    For the purposes of subsection (1), a person may be regarded as having considered whether or not facts existed if:

(a)    the person had considered, on a previous occasion, whether those facts existed in the circumstances surrounding that occasion; and

(b)    the person honestly and reasonably believed that the circumstances surrounding the present occasion were the same, or substantially the same, as those surrounding the previous occasion.

(3)    A person who wishes to rely on subsection (1) or (2) in proceedings for a civil penalty order bears an evidential burden in relation to that matter.

32    In support of its claim that it held a mistaken and reasonable belief that the relevant employees were not “eligible employees”, Hitachi submitted that, since late 2014 (when it first became aware of the LSL scheme’s amended coverage), relying on external advice from the Australian Industry Group (AIG), it had considered whether its employees were “eligible employees” and had adopted its position (that they were) by reference to what it understood to be the position widely and uniformly adopted by like businesses. Moreover, on 7 November 2014, Hitachi sent Coal LSL a letter based on a draft received from AIG containing its reasons for why its field services employees were not employed in the black coal mining industry (in response to a letter dated 3 October 2014 from Coal LSL about a particular field services employee). Hitachi submitted that Coal LSL did not take any enforcement action for almost five years after this letter was sent. This contributed, in Hitachi’s contention, to its belief that its position with respect to its employment of “eligible employees” was correct. In the absence of any change in circumstances, Hitachi continued to believe that the employees were not employed in the black coal mining industry and did not have duties directly connected with the day to day operation of a black coal mine.

33    Hitachi submitted that these mistaken beliefs arose at all relevant times. They were formed before 20 August 2015, which Hitachi contended was evident from correspondence between it and Coal LSL between November 2014 and June 2015.

34    In Hitachi’s submission, this evidence was sufficient to discharge the evidential burden on itself. It submitted that it now fell to Coal LSL to negative the operation of s 95 in Hitachi’s favour in these proceedings (citing He Kaw Teh v The Queen (1985) 157 CLR 523).

35    Additionally, Hitachi submitted that the mistaken beliefs were reasonable (and therefore satisfied the second limb of the defence in s 95(1)(a)(ii)) for three reasons: The beliefs were based on advice from AIG. They had not been the subject of any superior court judgment considering black coal mining industry coverage in the context of the Collection Act. The factual questions were “inherently opaque and uncertain”, as Starke J opined in R v Hickman; Ex parte Fox (1945) 70 CLR 598 at 612, the question of whether the relevant employees in that case were engaged in the coal mining industry was “not a technical expression, but a popular description, without any definite or clear limits”. Furthermore, the uncertainty of these “factual questions” was acknowledged by Latham CJ’s observation in R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123 at 130–1, that “[t]he line between industries is in many cases not clear”. For these reasons, noting the “substantial parallels” between this case and the “service provider” cases (such as Thiess Repairs, Re Federated Liquor and Allied Industries Employees’ Union of Australia; Ex parte Australian Workers’ Union (1976) 51 ALJR 266 and Re Transfield Services (Aust) Pty Ltd [2014] FWC 5368), Hitachi submitted that it cannot be said that its mistaken belief was formed outside the bounds of reason.

36    Hitachi also submitted that its mistaken beliefs concerned “facts” (for the purpose of satisfying the test under s 95(1)(a)), citing observations in High Court judgments that findings concerning whether or not an employee is employed or engaged in the coal mining industry are findings of fact. The same conclusion, in Hitachi’s submission, applies to whether duties are directly connected with the day to day operation of a black coal mine.

37    Coal LSL’s response to this argument was threefold. First, it submitted that s 95 relates to liability, not penalty, and this is therefore a matter that Hitachi should have pleaded and raised at the liability hearing.

38    Secondly, Coal LSL submitted that the matters about which Hitachi contends that it was mistaken relate to the legal characterisation of the facts that it knew existed around the work performed, so the matters are not “facts” for the purposes of a mistake of fact defence. Rather, they are questions of law or mixed questions of fact and law.

39    Coal LSL’s submissions observed that it is well accepted that a mistake as to a matter of law will not establish a mistake of fact defence, citing Von Lieven v Stewart (1990) 21 NSWLR 52; Environment Protection Authority of NSW v Goulburn Wool Scour Pty Ltd [2004] NSWCCA 439 at [58]. Coal LSL also made reference to Ostrowski v Palmer [2004] HCA 30; 218 CLR 493, in which the holder of a fishing licence acted on incorrect information given to him by a fisheries officer and fished in an area where he was not lawfully entitled to fish. His mistake was held to be one of law.

40    Thirdly, even if the matters that Hitachi submitted it was mistaken about were questions about “whether or not facts existed” for the purposes of s 95 (and were not questions of law or mixed questions of fact and law), Coal LSL did not accept that Hitachi held a “mistaken but reasonable belief” about these matters. Coal LSL submitted that the evidence showed that Hitachi was acutely aware that there was a serious risk it was contravening the law and pointed to its history of correspondence with Coal LSL in support of this claim.

Was Hitachi mistaken in fact?

41    Section 95 is premised on establishing that, at or before the time of the contravening conduct, the person considered whether the facts about which they were mistaken existed. I am of the view that this requires specific, point-in-time evidence to be adduced by the party seeking the benefit of the defence.

42    In Australian Electoral Commission v Kelly [2023] FCA 854 at [138]–[141] (AEC v Kelly), Rares J (in obiter) found that Mr Kelly would have been able to establish a defence under s 95 in respect of part of the applicant’s claim against him (which concerned the size of authorisation text on corflutes used in an election campaign). His Honour considered evidence of the steps that Mr Kelly had taken to satisfy himself of his position in relation to the facts about which he was mistaken. This included evidence of Mr Kelly ordering stickers with authorisations in a larger text to be placed over the smaller authorisations on existing corflutes, satisfying himself that the stickers were efficacious, and directing subordinates to apply the stickers to all existing corflutes. After these steps had been taken, Mr Kelly was told by his subordinates that the stickers had been applied to all posters, and formed a belief that all of the posters therefore had the larger authorisation on them. At the time that the Electoral Commission told Mr Kelly that this was not the case in relation to certain corflutes, the location of which it did not initially identify, he honestly and reasonably believed that the stickers had been applied to all of his corflutes.

43    AEC v Kelly exemplifies the kind of evidence that parties seeking to rely on s 95 can be expected to adduce. Useful evidence in cases of this kind may go to the views held by the party at the time of the conduct and, in order to prove the reasonableness of the mistaken belief, to the steps taken by the party to satisfy itself of the correctness of its position. Evidence of the latter kind may include information provided by third parties about the fact in question, like the information that Mr Kelly’s subordinates provided to him about the placement of the larger authorisation stickers on his corflutes.

44    Hitachi relied upon the evidence of Mr Smith, the Principal of Actus Workplace Lawyers (a law firm which he established), and Mr Moledo, the Director of Hitachi. Both witnesses were cross-examined.

45    Between March 2000 and August 2022, Mr Smith was initially Director – National Workplace Relations and later Head of National Workplace Relations Policy for AIG. The group is an industrial organisation of employers. Mr Smith’s role involved drafting AIG submissions and strategies across a wide range of workplace relations areas. One of his areas of responsibility was to assist member companies in understanding their obligations (if any) under the LSL scheme.

46    I accept the submission of Coal LSL that Mr Smith is not able to give evidence as to the state of mind of Hitachi. Mr Smith’s evidence can only go to information he or his then organisation (AIG) provided to Hitachi at relevant times. Mr Smith’s evidence was relevant in that it was without dispute that his organisation provided to Hitachi a copy of a template response (which was provided to numerous other companies at the same time) to be sent to Coal LSL in November 2014 stating why Hitachi, like other companies, was asserting that its employees were not “eligible employees” within the meaning of s 4 of the Administration Act.

47    Mr Smith gave general evidence about industry meetings in the period between 2014–2021 that one representative from Hitachi, namely Mr Chris Turner, typically attended. Mr Turner gave no evidence. This evidence does not assist given there was no specificity in Mr Smith’s evidence of the content of what was communicated to industry members during those meetings, whether Mr Turner was in fact present at any particular meeting and whether by any contemporary or complementary evidence from Mr Turner or any other person that he communicated back to Hitachi any of that information.

48    Furthermore, Mr Smith relevantly confirmed that in the period from 2014 up until the commencement of the proceedings in 2021, he was not engaged as a solicitor by Hitachi to provide it with any specific advice with respect to its obligations under the Administration Act, and when subsequently engaged, did not in fact provide any specific written advice with respect to its obligations (save as arose in the context of providing advice regarding Hitachi’s response to Coal LSL’s Notice to Produce).

49    Hitachi also relied upon the evidence of Mr Moledo with respect to this defence. Mr Moledo filed an affidavit (affirmed on 31 May 2023) on 1 June 2023 in which he deposed as to, in effect, Hitachi’s corporate understanding at all relevant times and as to what gave rise to its mistaken belief. There are significant limitations on the degree to which Mr Moledo’s evidence can be accepted as demonstrating Hitachi’s purported mistaken belief as to facts.

50    Mr Moledo conceded under cross-examination that (a) he was never responsible, by chain of command, for the work performed of the four employees; (b) he is not in a position to give the Court direct evidence of the facts pertaining to what the four employees did on a day-to-day basis; and (c) he was not in a position to give the Court any evidence on the legal position based on any advice he had received himself about coverage under the LSL scheme of Hitachi.

51    Mr Moledo’s evidence was of a general, conclusionary nature, where he does not identify any basis upon which he could give such evidence. It could not be deduced from his employment history with Hitachi how he could have any direct knowledge as to Hitachi’s state of mind at any stage in the period from 2014 until he became a director in 2021. Hitachi relies on the template letter prepared by AIG and then adopted by Hitachi in 2014 as in effect being evidence of Hitachi’s state of mind by reason of Mr Moledo’s evidence. I am not satisfied that Mr Moledo can give any evidence in this respect. Mr Moledo was in no way involved in any decision by Hitachi with respect to the adoption of its position with respect to the employees’ eligibility under the LSL scheme nor gave any cogent affirmatory evidence (with any factual foundation) as to what Hitachi’s state of mind was by reason of that template nor as to its state of mind in the years thereafter.

52    Between October 2014 and July 2019, Coal LSL and Hitachi corresponded on numerous occasions. Again, Mr Moledo was not in any way involved in any of the decision-making giving rise to that correspondence, appears to have no knowledge of its contents nor was a signatory to the correspondence. The correspondence was all sent in the name of Mr Turner. No evidence was adduced from any person who had direct knowledge as to the content of those communications during the relevant period.

53    Mr Moledo’s adoption of the statutory phrases contained in limb (a) of the definition of “eligible employees” in his evidence is of no assistance. In the absence of an evidentiary basis for how, when and by whom a mistake was made, and continued to be made, with respect to that misapprehension, I cannot be satisfied that there was in fact a mistake made.

54    To the extent that there was any such mistake, all that the Court has before it is the adoption by Hitachi of the template letter that Mr Smith of AIG prepared in November 2014. I accept the submission of Coal LSL that a careful reading of that letter reveals, rather than there being mistaken facts that underpinned the components of limb (b) that are required to be satisfied under s 4 of the Administration Act, the letter constituted a difference of opinion based on a construction of limb (b) (having a more limited operation when read in the context of limb (a) and the history of the cases that preceded the enactment of those provisions). Accordingly, even if it were accepted that there was such a “mistake” (which I do not accept has been established on the evidence), the mistake was truly one of an approach to construction: The adoption of a narrow reading of limb (b) rather than a mistake of fact within the meaning of s 95.

55    Satisfying the defence under s 95 requires that a person (in this case Hitachi) had at or before the time of the conduct constituting the contravention considered whether or not facts existed and was under a mistaken but reasonable belief of those facts, and had those facts existed the conduct would not have constituted a contravention of civil penalty provisions.

56    There was no evidence before me that at or before the time of the conduct constituting the contravention Hitachi had considered whether or not facts existed and was under a mistaken but reasonable belief about those facts. There was nothing within the pro forma letter illustrative of any specific consideration given by Hitachi to the factual circumstances that would give rise to the conduct constituting the contravention. Rather, the only evidence before me is that Hitachi adopted the pro forma letter prepared by AIG for its members to adopt. It may have considered whether or not underlying facts existed and was of a mistaken but reasonable belief about those facts, but it placed no evidence before me from the relevant time to that effect.

Appropriate penalty

Competing submissions

57    The parties’ submissions may be briefly summarised as comprising the following: Coal LSL submitted that at least eleven factors would be relevant in assessing the penalties that the Court should impose on Hitachi. At hearing, it sought a penalty of $30,000 for each contravention. Noting that the maximum penalty for each contravention is $55,000, it submitted that this placed its proposed penalty in the mid-range.

58    Hitachi submitted that this was a case in which no penalty should be imposed, on the basis that the deterrent function of any penalty would be either limited or non-existent in this case (see [67]–[69]). In the alternative, Hitachi submitted that the appropriate penalty was one in the low range (in the order of 5–15% of the maximum). In its view, such a penalty would appropriately meet the general and specific deterrent objects of a civil penalty, having regard to s 82 of the Regulatory Powers Act.

59    For the following reasons, I am of the view that penalties of $20,000, should be ordered for each contravention (equating to $40,000 in total) to achieve specific and general deterrence. I will consider in turn Coal LSL’s submissions as to the claimed eleven factors, interspersing responsive submissions from Hitachi.

Nature and extent of the contraventions

60    Coal LSL’s first three factors, along with its fifth factor, address two of the mandatory considerations: s 82(6)(a) (the nature and extent of the contraventions) and s 82(6)(b) (the nature and extent of loss and damage).

61    First, Coal LSL submitted that the conduct involves failures by Hitachi to lodge individual monthly “returns” (under s 5(1) of the Collection Act) and to give individual annual “reports” (under s 10(1) of the Collection Act) for any levy (being a tax), at all. Those failures are continuing. Secondly, Coal LSL submitted that the contraventions are by an employer, in an employment context, in respect of a statutory scheme (the LSL scheme) which confers important statutory benefits on its employees. I accept that Hitachi’s failure to meet its obligations under the scheme had the effect that long-serving employees (including a continuing employee, in the case of Mr Stair) have been denied their long service leave entitlements under the Administration Act.

62    Further, it is relevant that the LSL scheme was established by the Commonwealth to serve a public purpose, including to ensure a portable long service leave entitlement for employees who might be employed successively by several different employers in that industry: Liability Judgment at [289]–[293]. In addition, as identified in Coal LSL’s fifth factor, I accept that the contraventions occurred over many years and are continuing. The contraventions were not isolated examples of a failure to comply with statutory requirements. I do not accept Hitachi’s submission that account should be taken of the fact that the relevant employees had received entitlements pursuant to state long service leave legislation. Four employees were denied benefits under the scheme. They were denied their entitlements while they were employed, upon termination (except in the case of Mr Stair, who is still employed) and upon continuing employment (where their service should have continued to cumulate with a new employer). To submit that certain of the employees may have accessed applicable state long service leave schemes is not to the point.

63    In addition, it is relevant to consider the effect of the contravening conduct on the Fund to which the levies were payable (Coal LSL’s third factor). Additional adverse consequences flowed from the contraventions. Hitachi’s failure to pay $99,700.45 in levies reduced the funds available for investment under the Scheme (under s 7(b) of the Administration Act). I reject Hitachi’s argument that there is no evidence to support the assertion that the Fund suffers any clear and direct impact on its sufficiency. The setting of the levy is actuarially determined to ensure the sufficiency of the Fund for the reimbursement to employers for long service leave payments or payments out of the Fund in other limited circumstances: Administration Act, s 43; see also Liability Judgment at [309].

64    Another consequence of those funds not being available for investment was that the potential corresponding return on invested funds was not earned: Mr Dowzer, Coal LSL’s General Manager, Legal, gave evidence that the unpaid levies, if invested at the time they were due to be paid, those funds would have amounted to $152,908.09 (which equates to a shortfall of $53,207.64 in lost investment returns). The additional levy payable by Hitachi would not cover those lost investment returns, and this, in turn, would impact other employers in the rate of levy they would pay.

Hitachi’s size

65    By the fourth factor, Coal LSL made submissions concerning Hitachi’s size and financial turnover – relevant to a number of the mandatory considerations: the circumstances in which the contravening conduct took place (s 82(6)(c)); whether Hitachi had exercised due diligence to avoid the contraventions (s 13A(5)(b)); and whether Hitachi had a culture conducive of compliance (s 13A(5)(c)). There is an overlap between these considerations and deliberateness. I accept that account, in this regard, may be had of Hitachi’s position as part of a major multinational conglomerate, as well as the fact that Hitachi itself is a significant and well-resourced undertaking in Australia. In the 2019 financial year Hitachi generated in the order of $254 million from sales of equipment, in the order of $129 million from revenue from service sales and in the order of $197 million in revenue from parts sales: Liability Judgment at [243]. I accept that the penalty imposed needs to deter employers such as Hitachi (and others similar to it) from viewing contraventions such as these as an acceptable cost of doing business.

66    In response, at hearing, Hitachi submitted that, when looking at deterrence in the context of this type of mistake, the size of the contravener does not matter except insofar as it bears on the question of whether it was reasonable for them to at least make some inquiries in the first place. The fact that Hitachi is a part of a conglomerate was, it contended, only relevant if it can be found that aspects of the conglomerate bore some responsibility for the decision-making or in the context of a capacity to pay argument. I do not consider that the scope of what may be taken into account is as narrow as Hitachi contends. The size of Hitachi’s enterprise (and the conglomerate it forms part) is relevant to considering whether specific deterrence is necessary. The fact that Hitachi continues to operate in, and has a particular presence in, a sector where it will have continuing obligations under the LSL scheme is relevant to the need for specific deterrence.

Deliberateness

67    Hitachi submitted that the contraventions arose out of an honest, genuine, arguable but ultimately mistaken belief as to the application of the LSL scheme. According to Hitachi, the opacity of the definition of an “eligible employee” meant that Hitachi’s conduct was readily understandable. In that context, Hitachi quoted Gray J’s statement in Carr v Higgins Coatings Pty Ltd [2005] FCA 1809; 148 IR 201 at [17]:

…The penalisation of those whose conduct is essentially innocent, in order to deter others, is more likely to bring the law into disrepute than to preserve the integrity of the statutory scheme and to bring about widespread compliance with it.

68    Hitachi described this principle as well-recognised (citing Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607; 168 IR 368 at [18]; Australasian Meat Industry Employees Union v Australia Meat Holdings (1998) 82 IR 76 at 78; Victoria University of Technology v Australian Education Union [1999] FCA 1065; 91 IR 96 at [33]; Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 at [10]; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Ardmona Foods Limited [2006] FCA 1039; 155 IR 211 at [54]–[55]; Australian & International Pilots Association v Qantas Airways Ltd [2009] FCA 500 at [9]–[11]; Australian Liquor, Hospitality & Miscellaneous Workers Union v Broadlex Cleaning Australia Pty Ltd (1997) 78 IR 464 at 467; National Tertiary Education Industry Union v University of Sydney (Relief) [2023] FCA 537 at [48]–[56]).

69    I accept that the discretion allows, when considering the purpose of general and specific deterrence, for the Court to decline to impose a penalty. The cases relied upon by Hitachi reveal that the exercise is informed by the specific factual circumstances. For example, in Telstra, Gordon J held that the breaches were not flagrant, wilful or deliberate and, in those circumstances, that the legislative purpose of general deterrence was not furthered by the imposition of a penalty (and declined to impose a penalty): at [18]. In Meat Holdings, Kiefel J held it was not appropriate to impose a penalty in circumstances where the view taken by the employer that resulted in the underpayment was arguable though incorrect and the underpayment was a small amount ($431.97): at 78. However, in Victoria University, the Court found nothing wrong with what it inferred to be the primary judge’s conclusion, that to impose no penalty could be regarded as unwarrantably condoning a breach which was more than trivial or technical: at [33]. In Pine, the contravention was described as being “inadvertent”, unlikely to reoccur and the amount of wages affected was insignificant: at [10]. In Ardmona Foods, Ryan J declined to impose a penalty because the union and the affected worker had used the dispute settlement mechanism in the relevant award and had remedied the issue without any loss in remuneration: at [54]. In Broadlex, Moore J declined to impose a penalty after finding that there was uncontroverted evidence (in the form of advice to the employer, and a booklet the employer produced for its employees in reliance on that advice) that the employer believed that it was only obliged to provide four weeks of annual leave and no more, such that it demonstrated a genuine misunderstanding about the operation of the Award and had acted reasonably in endeavouring to ascertain its obligations: at 467.

70    For the reasons which follow, I do not consider any of the authorities cited by Hitachi in which no penalty was awarded as being analogous. This is not a case of “inadvertence”, nor one where the underpayment was minimal. It is also not a case where Hitachi had sought specific (incorrect) legal advice and relied upon it.

71    By its sixth factor, Coal LSL submitted that Hitachi’s conduct amounting to the contraventions was deliberate in that, internally, Hitachi had made deliberate decisions not to pay levy and therefore not to lodge monthly returns or annual reports. These decisions ran a serious risk of being in breach of the legislation. It was Coal LSL’s submission that Hitachi’s conduct amounted to “taking the odds”, and it must therefore expect serious consequences where its conduct is found to be in breach of the legislation: Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480 at [16]–[17] per Rangiah J; Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193; 131 FCR 529 at [308]–[310] per Wilcox, French and Gyles JJ. The attachment of the label of “taking the odds” is a loaded term; whether a party did that depends on the circumstances. It is my view, akin to the view of Wigney J in Association of Professional Engineers, Scientists and Managers Australia v Bulga Underground Operations Pty Ltd (No 2) [2020] FCA 812 at [33], that insufficient consideration and attention was given to the risk that Hitachi’s position was wrong and that they did not seek specific legal advice. Part of the purpose of the imposition of penalties is to achieve specific and general deterrence by holding employers responsible for properly exploring, in advance, the legal implications of their conduct: Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321; 201 IR 123 at [95]–[98].

72    In Hitachi’s submission, it did not matter that the letter was a template letter sent out to employers who had attracted Coal LSL’s attention. Even though it was not specific advice from a lawyer as to whether Hitachi were covered by the scheme in their own individual circumstances, Hitachi submitted that it was reasonable for it to have relied on general, non-specific advice, given that its position was that it was an employer of a certain kind and that individual level analyses were not necessary. It would have been unworkable, Hitachi contended, to provide individual analyses for every employee. I do not accept these submissions.

73    On 3 October 2014, Coal LSL asked Hitachi to provide its reasons for not considering one of its employees, Mr Ken Porthouse, to be an eligible employee. In response, on 7 November 2014, Hitachi sent Coal LSL the template letter drafted by AIG. Coal LSL thereafter sought to engage constructively with Hitachi, a large and sophisticated corporation, by way of correspondence to achieve compliance with a statute enacted by Parliament for the protection of employees. Between October 2014 and February 2019, Coal LSL and Hitachi corresponded on at least ten occasions. When that failed, Coal LSL was required to commence litigation to achieve compliance with the statute.

74    I accept that to now impose no penalty or a very low penalty would, as submitted by Coal LSL, be liable to undercut the objective of deterring non-compliance with the statute, which would be at odds with the principle of deterrence both specifically as against Hitachi and generally.

75    I do accept that, with respect to deliberateness, the contraventions arose from Hitachi adopting a particular construction of the statute, which AIG propounded, and where there was no specific authoritative guidance on the construction question. However, as I have stated, Hitachi did no more than adopt a pro forma document (to which Coal LSL had responded, expressing its disagreement with its contents) that focussed mostly on subs (a) and did not account for the differential operation of subs (b), with the location limb that exists in that sub-section. As noted by Wigney J in Bulga (at [34]):

While the proper calculation of employee entitlements upon termination under the Long Service Leave Act may, in the circumstances, have been disputed and disputable, the evidence, such as it was, did not suggest that Bulga went to any great lengths to appropriately consider, verify or seek professional advice in relation to the stance it had taken in relation to that dispute.

76    There is no general principle that a person who misunderstands their liability in circumstances that give rise to a civil penalty should be relieved of the penalty or should only receive a light one: Flight Centre v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 260 FCR 68 at 85–6 [63] per Allsop CJ, Davies and Wigney JJ. In addition, I accept that account may be taken of the fact that the offending conduct was based on receipt of legal advice – at least to the extent that it establishes that the conduct was done under the belief it was innocent and the contravener, now disabused of its belief, is not likely to reoffend: Flight Centre at [64]); Australian Building and Construction Commission v Australian Workers’ Union [2022] FCAFC 143; 406 ALR 20 at [82] per Moshinsky and O’Callaghan JJ. However, I do not accept that Hitachi’s mere adoption of a pro forma position espoused by an industry body is akin to it receiving specific legal advice and relying upon it. This is particularly so given the circumstances here – after Hitachi sent the AIG template response, Coal LSL asked in a letter dated 9 April 2015 that Hitachi “give further consideration to the question of [the employee’s] entitlement” in light of six counter-points to the contentions raised by Hitachi in the template response. Despite this Hitachi took no steps to obtain legal advice. It has not been established that Hitachi was innocent, did not understand the risk or, understanding the risk (which it must have), would have acted differently if it had received legal advice (which it had not).

77    In addition, there was no evidence that, even after the decision in Bis Industries Limited v Construction Forestry, Maritime, Mining and Energy Union [2021] FCA 1374 was handed down, Hitachi sought any advice. This did not mean that Hitachi’s contraventions were flagrant, but I do not accept, in the circumstances, that it follows that there should be no penalty, nor that there should be only a modest one.

Knowledge of senior decision-makers

78    By its seventh factor, addressing directly the mandatory consideration in s 13A(5)(a) (the level of the employees, officers and agents involved) and indirectly s 13A(5)(b) (due diligence exercised to avoid the contraventions) and s 13A(5)(c) (culture conducive of compliance)), Coal LSL submitted that it could be inferred from the evidence before the Court that senior decision-makers at Hitachi were aware of Coal LSL’s concerns about their approach to the LSL scheme.

79    In relation to the mandatory considerations contained in s 13A(5) of the Collection Act more generally, Hitachi contended that, applied to the facts surrounding its contraventions, these matters do not raise deterrence concerns. First, the involvement of “relatively senior [Hitachi] employees” is unsurprising given the nature of the issues at play: s 13A(5)(a). Second, its contraventions were the product of a mistaken but reasonable belief, based on professional advice, that the LSL scheme did not apply to it, rather than being a product of any lack of oversight or other failure of due diligence: s 13A(5)(b). Third, Mr Moledo’s evidence shows that Hitachi has a rigorous compliance system and culture across its various legal and financial responsibilities, evident in its otherwise clean record: s 13A(5)(c).

80    In this regard, I note my findings above. I do not accept that Hitachi has established that it was mistaken in fact. I do accept that it is unsurprising that Mr Turner, holding the position of National Human Resources Manager, was involved. However, I also note there is no evidence before me as to what steps either of them took in order to be able support the exercise of “due diligence” (for the purposes of s 13A(5)(b)) or that there was a “culture conducive of compliance” (for the purposes of s 13A(5)(c)). For the reasons identified above, Mr Moledo’s evidence is of very limited utility during the relevant period of non-compliant conduct.

Lack of admission

81    By its eighth factor, Coal LSL observed, and I accept that Hitachi had not made any admissions of wrongdoing that could have avoided or reduced the costs incurred in establishing liability, and which would have warranted a material reduction in penalties. Instead, in Coal LSL’s submission, Hitachi’s approach had been “to run a series of relatively novel (and wrong) legal arguments”, the effect of which was to increase expenditure of legal costs and the Court’s time and resources in resolving the matter. It is my view that it was open for Hitachi to run the arguments that it did at hearing, and despite their lack of success, they are not matters which enliven a further need for general or specific deterrence.

Steps towards rectification

82    I accept that account must be taken of the steps Hitachi has taken to remedy its non-compliance and go some way in demonstrating contrition. It was Mr Moledo’s evidence that Hitachi:

(a)    proposed, and continued, to engage in ongoing discussions with Coal LSL about which employees and former employees of Hitachi would or may be regarded as “eligible employees” under the reasoning of the Liability Judgment;

(b)    had submitted an employer registration form for the LSL scheme;

(c)    had applied to Coal LSL to remit the additional levy payable for the relevant employees (this application was refused);

(d)    had agreed on amounts and then transferred the levy and additional levy amounts prescribed in the Court’s orders of 12 and 13 April 2023 (as amended by the orders dated 1 May 2023) to Coal LSL;

(e)    had lodged monthly returns to Coal LSL for March and April 2023, and paid levy on eligible wages for Mr Stair (the only relevant employee whom Hitachi continues to employ); and

(f)    had met with representatives of Coal LSL to discuss whether current and former employees would or may be regarded as “eligible employees”. The parties have agreed to the mutual exchange of relevant information and to a further series of meetings.

Lack of contravening history

83    The ninth factor is uncontentious and relevant, there is no evidence of Hitachi having ever previously contravened the Collection Act.

84    Hitachi submitted that this fact warrants a “significant discount”: Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union v Thornton Engineering Australia Pty Ltd [2009] FCA 1584; 191 IR 315 at [22] per North J; Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Ltd (No 3) [2018] FCA 1395 at [63] per Wigney J. I accept that a substantial discount is warranted noting this is a mandatory relevant consideration in this case: Regulatory Powers Act, s 82(6)(d).

Whether the contraventions involve two separate courses of conduct or could constitute a single contravention

85    The tenth factor concerns whether the contraventions involve two separate courses of conduct or a single contravention. Coal LSL accepted that the Court may use its discretion to find that the various individual contraventions of ss 5(1) and 10(1) of the Collection Act (as to separate contraventions of these two provisions) involve two separate courses of conduct with respect to the breaches of those provisions. This would involve the application of the course of conduct principle or s 85 of the Regulatory Powers Act to the various month by month breaches of s 5(1) and year by year breaches of s 10(1). It noted the very significant number of individual months that Hitachi failed to provide Coal LSL a monthly return (or pay any levy) and the equally significant number of individual years that Hitachi failed to provide a report.

86    However, Coal LSL did not accept that the contraventions of the two provisions could be treated, overall, as one single contravention. This is because, according to Coal LSL, the contraventions of the different provisions did not involve the same conduct: Each provision imposed separate obligations, and Hitachi’s conduct in respect of each involved separate omissions. I accept this submission.

87    Section 5(1) of the Collection Act provides:

5 Returns by employers

(1)    A person who employs an eligible employee at any time during a month must, within 28 days after the end of that month, make a return in accordance with subsection (2) in respect of that month.

Civil penalty: 40 penalty units.

88    Section 10(1) of the Collection Act provides:

10 Requirement to give report to Corporation

(1)    If a person employs an eligible employee at any time during a financial year, the person must, no later than 6 months after the end of the financial year, give to the Corporation a report prepared by an auditor that:

(a)    states whether, in the opinion of the auditor, the person has paid all amounts of levy, or amounts of additional levy under section 7, that the person was required to pay in respect of the financial year; and

(b)    if, in the opinion of the auditor, the person has not paid all amounts of such levy or additional levy – specifies in what respect and to what extent, in the opinion of the auditor, the person has not paid those amounts; and

(c)    if, during the financial year, the person was paid an amount under Part 7 of the Administration Act – states whether, in the opinion of the auditor, the amount paid is correct; and

(d)    includes reasons for the opinions contained in the report.

Civil penalty: 40 penalty units.

89    As may be observed, it is clear that the obligations under ss 5(1) and 10(1) arise at different times – within 28 days after the end of each month in which the employee was employed (for s 5(1)) and 6 months after the end of the financial year (for s 10(1)). The provisions also require that the obligation is met by different persons – the employer (for s 5(1)) and a combination of an employer and an auditor (for s 10(1)); and require different forms of reporting.

90    By contrast, Hitachi submitted that, in the event that a penalty was imposed, a single civil penalty should issue. To do otherwise would run up against the statutory civil double jeopardy provision contained at s 84(2) of the Regulatory Powers Act, which provides that “the person is not liable to more than one pecuniary penalty under this Part in relation to the same conduct”. I do not accept this submission.

91    It was Hitachi’s submission that the reference to the “same conduct” in s 84(2) is not to be taken as a reference to the strict elements of the contraventions (contrary to Coal LSL’s submission outlined above), but instead refers to “what the person actually did, with all of its attributes and in its whole context”: Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2019] FCAFC 201; 272 FCR 290 at [18] per Bromberg, Wheelahan and Snaden JJ (CFMMEU v ABCC), quoting Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (The Australian Paper Case) (No 2) [2017] FCA 367 at [40] per Jessup J. I agree with the soundness of this holding.

92    However, I do not accept that, by application of this holding, Hitachi is able to argue that a single civil penalty should issue. Each case depends on its facts and the relevant statutory provisions giving rise to the contraventions. Hitachi is not able to rely on the reasoning in The Australian Paper Case. In that case, consideration was given to whether the contravening conduct giving rise to breaches of ss 417 and 421 of the FW Act gave rise to a single civil penalty. There particular conduct was the taking of industrial action. Here, it said that the circumstances are analogous. They are not.

93    Hitachi submitted that what it “actually did” (adopting the test from The Australian Paper Case) was to make a mistake that led it to conclude that the relevant employees were not “eligible employees”. The consequence of that mistake was that it did not make monthly returns or give an annual financial report. The conduct that contravened ss 5(1) and 10(1) of the Collection Act was relevantly the same (or the contraventions were “in relation to the same conduct”). Hitachi therefore submitted that it should not be liable to more than one pecuniary penalty. This submission must be rejected. It cannot be accepted that where a person adopts an incorrect construction of its legal position (for example, that the employee holds the status of being a causal employee) that the resultant contraventions of the FW Act or an award (for example, concerning entitlement to various forms of leave and notice on termination) or, as in this case, of two provisions of a statutory scheme providing for the administration of long service leave for a particular industry, would be treated as a single contravention.

94    Further, putting aside the operation of s 84(2), Hitachi submitted that the course of conduct principle could support the imposition of a single penalty only. They contended that, here, there is a clear factual interrelationship between the contraventions, such that the imposition of two penalties would amount to double punishment for what was “essentially the same” (quoting Cahill at [39]) contravening conduct. In Hitachi’s submission, this supports the conclusion that it is appropriate to impose penalties on the basis of one effective statutory maximum only.

95    I do not accept this. Section 84 of the Regulatory Powers Act expressly relates to contraventions involving the “same conduct”, and regard must be had to the express words of the provision: CFMMEU v ABCC at [25]. I accept the submission of Coal LSL that ss 5 and 10 contain separate elements: Section 5 involves a failure to lodge monthly returns and pay associated levy. Section 10 involves a failure to lodge a report each financial year. While they each might be described as involving “similar conduct”, they do not involve the “same conduct”: Electoral Commissioner of Australian Electoral Commission v Wharton (No 3) [2021] FCA 742 at [36] per Logan J. The contraventions of each provision involve separate obligations and omissions. Those separate omissions are what Hitachi, in this case, failed to do.

Totality

96    Having regard to the above, I accept as Coal LSL submitted (the eleventh factor) that the principle of totality does not have a role in relation to the contraventions in this case. There is no unjustness or inappropriateness that arises. A penalty in the mid range is not disproportionate to the contravening conduct, having regard to the need for deterrence.

97    Lastly, I note that Hitachi made two further points. First, it submitted that Coal LSL’s conduct had contributed to Hitachi’s view that the contravening conduct was lawful. The first aspect of this submission concerned Coal LSL’s guidance material, which Hitachi said referred to decisions of the Australian Industrial Relations Commission and Fair Work Commission, each expressing the intention to preserve the status quo between key pre-modern awards and extracted passages from various High Court judgments dealing with the composite phrase “in the black coal mining industry”. Hitachi contended that the material stated that duties not likely to be “directly connected with the day to day operation of a black coal mine” in various circumstances aligned with the evidence and findings regarding Hitachi’s field services employees at [126]–[127] and [149] of the Liability Judgment.

98    The second aspect of Hitachi’s submission that Coal LSL’s conduct had contributed to Hitachi’s views regarding the contravening conduct related to Coal LSL’s “inaction over the better part of the relevant contravening period”. Hitachi acknowledged that Coal LSL had written to it in 2014, seeking an explanation as to why it was not paying levy. However, it submitted that it had responded to this and provided reasoning in support of its position and Coal LSL subsequently took no action until it issued notices to produce in April 2019 and then commenced proceedings in 2021. Hitachi also submitted that Coal LSL had “vacillated” with respect to which of the employees it considered to be “eligible employees”.

99    I do not accept that Coal LSL’s conduct contributed to Hitachi’s contravening conduct. As referred to above, there had been robust exchanges between it and Hitachi for an extended period prior to the commencement of the proceedings. This conduct could not be relied upon as having engendered a view on Hitachi’s part that its position was correct.

100    Secondly, Hitachi submitted that, to avoid double punishment, the Court should factor in the deterrent or punitive effect of the additional levy already imposed on, and paid by, Hitachi when assessing the quantum of penalty required to achieve general and specific deterrence. I do not accept that the imposition of the additional levy has the effect of comprising a double punishment.

Resolution of the penalty question

101    By reason of the above, I am satisfied that it is appropriate to order that Hitachi pay to the Commonwealth within 28 days an aggregate pecuniary penalty of $40,000.

Costs

102    Coal LSL sought costs of and incidental to the proceedings both at the liability and penalty phase, as agreed or assessed. Both parties accepted that the applicable costs regime was that under the Federal Court Act 1976 (Cth) and Federal Court Rules 2011 (Cth).

103    Hitachi agreed that Coal LSL should have its costs of and associated with the liability hearing, as agreed or assessed but subject to a 20% reduction accounting for Coal LSL’s lack of success on the contention that Hitachi was an “employer engaged in the black coal mining industry”. Hitachi submitted that such a reduction was appropriate given the argument occasioned separate and distinct evidence and argument as to the substantial character of Hitachi’s business, and involved a lack of discrimination in the selection of the claims advanced: Sandoz Pty Ltd v H Lundbeck A/S (No 2) [2021] FCAFC 47 at [30]–[31], [33] per Nicholas, Yates and Beach JJ.

104    I do not accept this submission.

105    Ordinarily, a successful party is entitled to an award of costs in its favour in the absence of special circumstances that would justify some other order: see Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at [11] per Black CJ and French J; Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67] per McHugh J, [134] per Kirby J; Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [6]–[7] per Emmett, Kenny and Middleton JJ. The fact that a court does not accept every argument from a successful party does not make it appropriate to apportion costs on an issue-by-issue basis: Australian Trade Commission v Disktravel [2000] FCA 62 at [3]–[4] per French, Kiefel and Mansfield JJ; Sportsbet at [8]; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6] per French CJ, Kiefel, Nettle and Gordon JJ.

106    As to whether the relevant employees were “eligible employees” within the LSL scheme, this involved the determination of whether the employees fell within limbs (a) or (b) of the definition in s 4 of the Administration Act. However, it is not possible to compartmentalise the overlap and separateness of the same. There were overlapping considerations with respect to both limbs (whether the employees were employed in the black coal mining industry). Further, when addressing either limb, the work performed by the employees and the duties they discharged would be relevant. The evidence as to revenue generated and its proportion would also be relevant to either limb. As a consequence, it cannot be accepted without evidence that there was specific additional work occasioned by Hitachi because of Coal LSL’s argument with respect to limb (a) that would not otherwise have been required. Moreover, I accept that Hitachi’s argument said nothing (and there was no evidence led) as to the cost incurred with respect to the many unsuccessful arguments Hitachi advanced concerning whether the levy was a tax, and the operation of limitation periods. It is my view that Hitachi has not established that a reduction in costs of 20% ought to be granted.

107    Further, given Coal LSL has been successful in its application for penalties, it is entitled to its costs for this aspect of the application as well.

108    Accordingly, I order that Hitachi pay Coal LSL’s costs for both the liability and penalty hearing.

Conclusion

109    Accordingly, I order that Hitachi pay to the Commonwealth within 28 days an aggregate pecuniary penalty of $40,000, as well as the Commonwealth’s costs for the liability and penalty hearings.

Associate:

Dated:    6 October 2023