Australian Federation of Air Pilots v Skywest Airlines Pty Ltd

counsel appeared for Australian Federation of Air Pilots ("AFAP") and Mr Parry of counsel appeared for Skywest. At the conclusion of those submissions the Court announced the orders it proposed to make and advised that the reasons for the making of those orders would be delivered as soon as was reasonably practicable. The orders which the Court made were as follows: "1. The respondent, Skywest Airlines Pty Ltd pay a penalty of $750 for breach or non-observance of clause 30(A) of the Skywest Airlines Pty Ltd Pilots' Agreement 1986 ("the award"). 2. The respondent, Skywest Airlines Pty Ltd pay a penalty of $750 for breach or non-observance of clause 30(F) of the award. 3. Each such penalty to be paid to the Applicant, Australian Federation of Air Pilots, on or before 18 November 1996." My reasons for making those orders are as set out below. There was no issue between the parties that there had been two separate breaches of two separate clauses of the award and that, therefore, the Court was able to impose a penalty in respect of each such breach. See Lynch v Buckley Sawmills Pty Ltd ("Buckley") (1984) 3 FCR 503, 507 per Keely J and Gibbs v City of Altona (1992) 42 IR 255, 261 per Gray J. Mr Borenstein submitted that the maximum penalty of $1000 should be imposed in respect of each breach. He contended that there were no mitigating circumstances in this case and that the conduct of Skywest which constituted the breaches was deliberate conduct rather than a mere oversight, in circumstances where a previous practice was unilaterally altered with no notice. He described Skywest's conduct as "both flagrant and high-handed". He referred to the clauses of the award which had been breached (i.e. those creating and facilitating the workings of an integrated seniority list for pilots) as: "... a central feature of the employment picture of all the pilots in the Skywest Group of companies. They form a cornerstone of the pilots' expectations and entitlements to progression through their employment, and they have been relied upon by the pilots for that purpose, a reliance which has been fostered and encouraged by the actual practice of the respondent up until September of 1994." Mr Borenstein relied upon an affidavit of Mr Cox which was prepared for the purpose of the hearing in relation to penalty. The affidavit refers to the fact, which was not in dispute, that Skywest refused to create and facilitate the workings of an integrated seniority list after the judgment of 31 October 1995 until the judgment of the Full Court. Mr Borenstein submitted that Skywest's conduct between 31 October 1995 and 27 September 1996 was indicative of a lack of remorse on its part for the breaches of the award it had committed. Mr Parry submitted that in 1994 Skywest formed a different view as to its obligations under the award from that which it had previously held. He described the breaches as not deliberate. He effectively submitted that Skywest's view of its award obligations was arguable and that Skywest believed its conduct was consistent with its award obligations. Mr Parry informed the Court that Skywest continued to operate in accordance with its view of its obligations, notwithstanding the judgment of 31 October 1995, given that it had filed an appeal against that judgment. He put it that there was no utility in seeking to stay the orders of 31 October 1995 as the Court had merely made declaratory orders. In my view, the conduct of Skywest after the judgment of 31 October 1995 was disrespectful to the Court. Declaratory orders only were made on that day for the purpose of enabling the question of penalty to be addressed after the parties had had sufficient time to consider the reasons for judgment of the Court. As at 31 October 1995, there was a reasoned judgment of the Court which had given an interpretation of the relevant clauses. To simply ignore that judgment and operate as if it were never made, was discourteous and high-handed. Appropriate conduct in the circumstances would have been for Skywest to apply to the Australian Industrial Relations Commission to vary the relevant clauses on an interim basis, pending the appeal proceedings. This was capable of being done on a basis whereby Skywest might have made it clear that it was not abandoning the arguments it wished to pursue on appeal, but recognised that a judgment of a Superior Court of Record had determined that its conduct was unlawful. In the circumstances, it is my view that the behaviour of Skywest between 31 October 1995 and 27 September 1996 bordered upon an attitude of arrogant indifference to the judgment at first instance. It must also be borne in mind as Keely J said in Buckley at 508 that: "(employers) understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligations to comply with particular provisions of an award or the award generally should only be taken after careful consideration." I accept Mr Borenstein's submissions regarding the importance to individual pilots of compliance with the provisions of the award regarding an integrated seniority list. Reasonable and legitimate expectations about career progression would have arisen in the minds of at least some pilots affected by the outcome of this matter when orders were made by the Court on 31 October 1995. Therefore, the flagrant disregard of the Court's judgment by Skywest would have adversely affected those very individuals for whose benefit the relevant provisions in the award were made. Those factors militate against the ordering of a penalty towards the middle of the available range, a result for which Mr Parry contended. In my view, a penalty towards the upper end of the range should be ordered in respect of each breach. In failing to order the maximum penalty in each case, I take account of the fact that Skywest has not previously been held to have breached an award. More importantly, I also take into account the fact that its submissions on the construction of the award were not without some degree of merit although ultimately not preferred. In other words, the contentions raised in the proceedings were not unarguable nor were they simply raised for purposes of delay. I do not believe that it is appropriate to reduce the penalty in each case because the breaches refer to related topics, as Mr Parry suggested the Court should. To do so would run counter to the uncontested position that a separate penalty might be imposed for breach of each separate clause. It is appropriate to penalise Skywest for failing to maintain an integrated seniority list. By failing to maintain such a list it has also failed to facilitate its operation. Each such breach is in my view equally serious and deserving of a penalty in the same amount. It is appropriate, given the expense and trouble incurred by AFAP in seeking to enforce the award, that each such penalty be ordered to be paid to it in accordance with s356(b) of the Act. I agree with the views of Gray J in Electrical Trades Union of Australia v Sims Products Ltd (trading as Besco Batteries (1988) 42 IR 250 at 244 that: "... An order that the penalty be paid to the applicant will tend to encourage the enforcement of awards." The order of the Court is: 1. The respondent, Skywest Airlines Pty Ltd pay a penalty of $750 for breach or non-observance of clause 30(A) of the Skywest Airlines Pty Ltd Pilots' Agreement 1986 ("the award"). 2. The respondent, Skywest Airlines Pty Ltd pay a penalty of $750 for breach or non-observance of clause 30(F) of the award. 3. Each such penalty to be paid to the Applicant, Australian Federation of Air Pilots, on or before 18 November 1996. I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment herein of his Honour Justice Marshall. Associate: Date: Counsel for the Applicant: Mr H Borenstein Solicitor for the Applicant: Mahony Galvin Rylah Counsel for the Respondent: Mr F Parry Solicitor for the Respondent: Freehill Hollingdale and Page Date of hearing: 28 October 1996 Date of order: 28 October 1996 Publication of Reasons: 6 November 1996