Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 17 of 2010

BETWEEN: AUSTRALIAN LICENSED AIRCRAFT ENGINEERS ASSOCIATION

AND: INTERNATIONAL AVIATION SERVICE ASSISTANCE PTY LTD (ACN 079 919 565)

JUDGE: BARKER J DATE: 20 APRIL 2011 PLACE: PERTH

OUTSTANDING ISSUES 1 On 8 April 2011 the Court delivered its primary decision in this proceeding: see Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333. 2 The Court then said it would make declarations and orders to the following effect: 1. A declaration that the respondent took adverse action against Mr Puspitono in contravention of s 340(1) of the FW Act. 2. A declaration that the respondent took adverse action against Mr Puspitono in contravention of s 346(1) of the FW Act. 3. An order that, pursuant to s 545 of the FW Act, the respondent pay compensation to Mr Puspitono for loss suffered by him because of the contraventions, together with prejudgment interest to be calculated. 4. An order that the respondent pay pecuniary penalties under s 546 of the FW Act for the contraventions of s 340 and s 346 of the FW Act, such pecuniary penalties to be assessed and paid to the applicant. 3 The Court indicated it would hear from the parties in relation to the calculation of prejudgment interest, pecuniary penalties and costs of the proceedings, and the final orders to be made. 4 The matter was then listed for final hearing in respect of those issues on 12 April 2011.

PRE-JUDGMENT INTEREST 5 At [457] - [460] of the primary judgment the Court indicated that it would award pre-judgment interest on the various heads of loss in respect of which it would order compensation and invited the applicant to submit relevant interest calculations. 6 Having regard to the calculations made and submissions presented on behalf of the applicant in respect of general loss of wages and remuneration that I assessed in the sum of $76,553.58, I would now add pre-judgment interest in the sum of $8,740.20, making a total amount of compensation under this head of loss in the sum of $85,293.78. The pre-judgment interest has been calculated from approximately the date of termination of employment on 13 November 2009 to judgment on 8 April 2011, as follows: General Loss: $76,553.58 Date Range Days in Period Interest Rate Total Interest for Period 13 November 2009 to 31 December 2009 49 7% $ 719.40 1 January 2010 to 30 June 2010 181 7.75% $2,942.06 1 July 2010 to 31 December 2010 184 8.5% $3,280.26 1 January 2011 to 8 April 2011 98 8.75% $1,798.48

7 In respect of the item of economic loss for shipping costs of $585.00, I would add pre-judgment interest of $57.80, making a total compensation under this head of loss of $642.80. The interest has been calculated from 28 January 2010, when the cost was incurred, to Judgment on 8 April 2011 as follows: Loss of Shipping Costs: $585 Date Range Days in Period Interest Rate Total Interest for Period 28 January 2010 to 30 June 2010 153 7.75% $19.00 1 July 2010 to 31 December 2010 184 8.5% $25.06 1 January 2011 to 8 April 2011 98 8.75% $13.74

8 In respect of the item of economic loss for flight costs in the sum of $254.00, I would allow prejudgment interest in the sum of $25.15, making a total sum by way of compensation of $279.15. The interest has been calculated from 27 January 2010, when the cost was incurred, to Judgment on 8 April 2011, as follows: Loss of Flight Costs: $254 Date Range Days in Period Interest Rate Total Interest for Period 27 January 2010 to 30 June 2010 154 7.75% $ 8.30 1 July 2010 to 31 December 2010 184 8.5% $10.88 1 January 2011 to 8 April 2011 98 8.75% $ 5.97

9 In respect of the non-economic loss that I awarded in respect of distress, hurt and humiliation, assessed in the sum of $7,500, I would allow pre-judgment interest in the sum of $856.29. The total interest has been calculated from 13 November 2009 to Judgment on 8 April 2011, as follows: Non-Economic Loss for Distress: $7,500 Date Range Days in Period Interest Rate Total Interest for Period 13 November 2009 to 31 December 2009 49 7% $ 70.48 1 January 2010 to 30 June 2010 181 7.75% $288.24 1 July 2010 to 31 December 2010 184 8.5% $321.37 1 January 2011 to 8 April 2011 98 8.75% $176.20

PECUNIARY PENALTY 10 At paragraph [465] of the primary judgment I indicated that the imposition of pecuniary penalties is appropriate in this case. While the power of the court to impose a pecuniary penalty under section 546 of the FW Act is discretionary, I consider it is appropriate in this case as the contraventions should not be considered innocent or inadvertent. As the applicant submits, the respondent was on notice about the central issue in this proceeding by reason of the earlier proceedings which arose from its May 2009 suspension of Mr Puspitono, litigation which had in fact been settled following the consent order that provided for Mr Puspitono's reinstatement. As I have explained in the primary judgment, following Mr Puspitono's reinstatement in July 2009, not a lot more happened prior to the adverse actions that resulted in the contraventions I have found. In a practical sense, the respondent seems to have attempted to undo what it had agreed to do through the consent orders when it reinstated Mr Puspitono. As I have found in the primary judgment, the respondent, through both Mr Scott, who made the negative assessment, and the respondent more generally in giving the negative assessment to Garuda, must have appreciated the likely adverse consequences for Mr Puspitono when it took these adverse actions. As I have pointed out in the primary judgment, Mr Scott obviously appreciated the possible consequences of his negative assessment and yet he distinctly failed or neglected to bring the contents of the renewal application that he asked Mr Puspitono to sign, to Mr Puspitono's attention. One is left with the distinct sense that the adverse actions of the respondent in making the negative assessment and in giving it to Garuda were calculated to achieve the ultimate result of dismissal of Mr Puspitono from his position as a licensed aircraft maintenance engineer. All of these adverse actions, as I found, owe themselves to the exercise by Mr Puspitono of workplace rights or his engaging in industrial action, as defined in the FW Act. In these circumstances it is appropriate that a pecuniary penalty be imposed. 11 However, the three separate adverse actions and contraventions should be treated as one distinct course of action for penalty purposes and not the subject of three separate pecuniary penalties. 12 The maximum penalty that may be imposed under the FW Act is $33,000: see s 539 and 546(2) of the FW Act and Crimes Act, 1914 (Cth), s 4AA. 13 As Moore J explained in Rojas v Esselte Australia Pty Limited (No 2) [2008] FCA 1585, the following matters, while not intended to be an exhaustive list of relevant matters, should be regarded in exercising the discretion to impose a pecuniary penalty: the circumstances in which the relevant conduct took place, including whether it was undertaken in deliberate defiance or disregard of the Act; whether the respondent has previously been found to have engaged in conduct in contravention of the particular part of the Act in question; whether more than one contravention of the particular part of the Act is involved, and whether the contraventions are properly seen as distinct or arising out of the one course of conduct; the consequences of the conduct found to be in contravention of the particular part of the Act; the need, in the circumstances, for the protection of industrial freedom of association; and the need for deterrents - both specific and general. 14 Taking all of those factors into account and recognising that in imposing a pecuniary penalty in such circumstances the Court engages in a process which has been called "instinctive synthesis" (as to which see McDonald v Australian Building and Construction Commissioner [2011] FCAFC 29 at [12], [50]), I turn to the circumstances of this case. 15 I have already, in saying that it is appropriate that a pecuniary penalty be imposed, considered the circumstances in which the contraventions took place. In my view, they are not innocent or inadvertent contraventions but were undertaken in disregard of the Act. 16 I note however that the respondent has not previously been found to have engaged in conduct in breach of the freedom of association provisions of the FW Act. 17 I have already noted that it is proper to consider that the respondent has only engaged in one course of conduct in this case, and should not be penalised on the basis that there were three separate contraventions. 18 The consequences of the course of conduct were quite severe. Mr Puspitono, who had a real expectation that he would be able to continue working for the respondent in Australia, soon found, following the termination of his employment, that he was obliged to return to his home country, Indonesia, because his Australian visa to work in this country was lost. His reputation suffered as a result of the adverse actions. As I have found, he suffered distress, hurt and humiliation. The respondent, as I have suggested, seems on any view of the evidence, to have taken calculated adverse actions against Mr Puspitono. 19 When one considers the consequences of the contraventions, the consideration that the Court should also consider the need for the protection of industrial freedom of association is highlighted. An employee of an employer, such as Mr Puspitono in this case, is a vulnerable person whose personal and financial interests are very much in the hands of his or her employer. The law of Australia has for a long time emphasised the importance of industrial freedom of association. The FW Act marks out industrial freedom of association as one of its important objectives. I take into account in this case the need for a pecuniary penalty to reflect the importance of the maintenance of that objective of the FW Act. 20 Related to this issue is also the need for deterrents, both specific and general. At a general level, persons in the position of an employer must receive a message, indicated by the imposition of a pecuniary penalty, that much more than lip service is to be paid to the objectives of the FW Act in relation to industrial freedoms. Additionally, the particular conduct of the respondent in this case must be the subject of censure. As I have indicated, it was calculated conduct in this case done with disregard for the entitlements of Mr Puspitono. 21 Taking into account all of these factors, and considering generally what is an appropriate penalty having regard to all of the facts in this case, including that the maximum pecuniary penalty is $33,000, I would impose a pecuniary penalty at about a third of the way up that scale. The contraventions are serious. As I have said, they were in disregard of Mr Puspitono's rights. However, while the respondent has not acknowledged its contravention at any relevant point, this is the first occasion of a contravention by the respondent of the FW Act freedom of association provisions. I therefore consider that a pecuniary penalty that is significant, but not as significant as it could be in other cases, should be imposed. I would impose a pecuniary penalty of $10,000. 22 I consider that it is appropriate in all the circumstances of this case that the penalty be paid to the applicant union. The Union has, in accordance with its rights under the FW Act, maintained these proceedings for the benefit of its member, Mr Puspitono. By my separate orders compensating Mr Puspitono, he will be separately compensated. It is appropriate that the pecuniary penalty should go to the Union in this case.

COSTS 23 As noted at [467] of the primary judgment, under the FW Act costs are not to be ordered unless certain circumstances are made out. In this case, the applicant union says that costs should be awarded under s 570(2)(b) in that the Court should be satisfied that the respondent's "unreasonable act or omission caused the other party [the applicant] to incur the costs". 24 The basis upon which this application is put by the union is that it endeavoured to settle the proceedings as far as compensation and pecuniary penalty is concerned through a series of without prejudice proposals, the last of which was rejected just prior to the final hearing by the respondent. 25 The sequence of without prejudice offers commenced on about 22 December 2010. The respondent's position throughout the period of exchange of offers and counteroffers essentially remained the same. On 24 December 2010 at 10.58 am, the respondent's solicitors indicated to the Union's solicitors the following proposal: we are instructed instead to offer a payment to your client of a total amount of $50,000, inclusive of the amount of $15,000 paid into Court by it as security for costs (i.e. payment by our client of an extra amount of $35,000), subject to the usual terms including confidentiality, no disparagement by either party (and Mr Puspitono) of the other; in full and final settlement, release and discharge from all claims etc arising out of or related to the employment of Mr Puspitono with our client and the termination of such employment; with the proceedings to be dismissed with no orders to costs (save that the amount of $15,000 paid into Court by our client be released to your client); all such terms to be recorded in a Deed of Settlement, executed by the parties and Mr Puspitono; payment of the sum of $35,000 and the release of the amount of $15,000 from the Court to be conditional on the prior execution of the Deed. 26 That counter-offer was rejected. On 6 January 2011, just before the trial was due to commence on 10 January 2011, the solicitors for the Union finally proposed settlement on the following terms: 1 The First Respondent pay to Mr Puspitono $27,525.86 (subject to appropriate taxation arrangements being agreed); 2 The First Respondent pay to the Applicant union the sum of $50,000 (inclusive of the $15,000 paid into Court [in December 2006 on the adjournment of the proceeding] which will be released, by consent, to the Applicant); 3 The above is subject to a mutually agreeable deed of settlement being agreed which does not limit in any way the capacity of our client to bring proceedings for any future breaches of relevant legislation engaged in by your client. 27 On 6 January 2011 the Union's without prejudice offer of settlement was rejected on behalf of the respondent. Amongst other things the solicitors for the respondent indicated that their client had incurred substantial costs in the matter since the Union rejected an earlier offer of settlement made on behalf of the respondent. 28 The respondent's solicitors also stated that the Union's latest offer did not explain Mr Puspitono's loss or why the Union should receive the amount it seeks. In short, the respondent considered the offer was made "as high as it is going to be". 29 In McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086; (2007) 164 FCR 591, a case that dealt with the payment of costs under s 824 of the former Workplace Relations Act 1996 (Cth) as amended by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), Buchanan J considered that costs could be awarded against a party for refusing a reasonable offer of settlement, on the basis it constitute "an unreasonable act or omission, [which] caused another party to the proceeding to incur costs in connection with the proceeding". 30 The Union submits that in the case now before the Court, the Court may be satisfied that the respondent's failure to settle on the terms offered constituted an unreasonable act or omission on its part which caused the applicant to incur significant costs, which should now be awarded to it on an indemnity basis. 31 In my view, it is open to the Court to have regard to the without prejudice exchanges that culminated in the respondent rejecting a final offer of settlement made on behalf of the applicant on 6 January 2011 just before trial in order to determine whether the unreasonable act or omission of the respondent caused the applicant to incur costs. 32 Having regard to the findings of the Court and the compensation awarded in favour of Mr Puspitono, the Union's proposal as of 6 January that the respondent pay Mr Puspitono $27,525.86 (subject to appropriate taxation arrangements being agreed) was more than reasonable. 33 However, the applicant's further proposal that the respondent pay the Union the sum of $50,000, inclusive of the $15,000 paid into Court under the December adjournment order, in light of the result in this case, was not a reasonable offer. I have awarded a pecuniary penalty in the sum of $10,000. The maximum amount of costs thrown away by the December adjournment was then assessed by me to be no more than $15,000. The Union's proposal was more than double that sum. 34 Of course, if one takes the global settlement proposal of the Union of something just less than $80,000, then the total compensation order I have made in favour of Mr Puspitono, plus the pecuniary penalty I have indicated, exceeds that sum by a considerable amount. However, the proposal put by the Union was a composite one that plainly envisaged, as a principal component, the payment of the stipulated pecuniary penalty inclusive of earlier costs thrown away, to the Union. If it were reasonable for the respondent to decline that component of the settlement offer, as I think it was, then it was reasonable to refuse the entire settlement offer. 35 When all is said I am not satisfied that the act of the respondent on 6 January 2011 in refusing the settlement proposal put on behalf of the Union, in the terms that it was cast, was an unreasonable act. In those circumstances. I decline to make an order for costs in favour of the applicant under s 570 of the FW Act.

DECLARATIONS and orderS 36 For these reasons the Court would make the following final declarations and orders: THE COURT DECLARES THAT:

1. The respondent: (a) Contravened s 340(1) of the Fair Work Act 2009 (Cth) when it dismissed Mr Djoko Puspitono from his employment on 16 October 2009. (b) Contravened s 346(1) of the Fair Work Act 2009 (Cth) when it dismissed Mr Djoko Puspitono from his employment on 16 October 2009. (c) Contravened s 340(1) of the Fair Work Act 2009 (Cth) when the respondent, through its officer, Mr Mark Scott, made a negative assessment of Mr Djoko Puspitono on the Garuda Authorisation application form on or around 23 September 2009. (d) Contravened s 346(1) of the Fair Work Act 2009 (Cth) when the respondent, through its officer, Mr Mark Scott, made a negative assessment of Mr Djoko Puspitono on the Garuda Authorisation application form on or around 23 September 2009. (e) Contravened s 340(1) of the Fair Work Act 2009 (Cth) when the respondent, through its officer Mr Thomas Beamon, gave the Garuda Authorisation Application form containing the negative assessment of Mr Djoko Puspitono to Garuda Indonesia. (f) Contravened s 346(1) of the Fair Work Act 2009 (Cth) when the respondent through its officer Mr Thomas Beamon, gave the Garuda Authorisation Application form containing the negative assessment of Mr Djoko Puspitono to Garuda Indonesia. THE COURT ORDERS THAT: 2. Pursuant to s 545 of the Fair Work Act 2009 (Cth), the respondent pay compensation to Mr Puspitono for loss suffered by him because of the contraventions, including prejudgment interest, in the sum of $94,572.02. 3. Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the respondent pay a pecuniary penalty of $10,000 for the contraventions. 4. Pursuant to s 546(3) of the Fair Work Act 2009 (Cth), the respondent pay the penalty in order 3 above to the applicant. 5. There be no order as to costs. 6. The compensation and penalty ordered in orders 2 and 3 above be paid within 14 days of today's date. I certify that the preceding thirty six- (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.