Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith

The application of the principle of totality or proportionality 18 The magistrate's process of reasoning on penalties may be summarised as follows. Her Honour made a number of findings. Her Honour found the contraventions to be broad-ranging and to reveal a disregard for the appellant's award obligations. The contraventions covered ordinary rates of pay, as well as penalty rates for overtime, evening work, Saturday and Sunday and public holidays, rates for sick leave, annual leave and annual leave loading, payment-out of accrued and pro rata annual leave on termination and payment in lieu of notice of termination. Her Honour described the underpayments as "significant". She referred to the long history of the matter and to attempts to procure voluntary compliance over a period of 18 months, which were unsuccessful. Her Honour dealt with the failure to make good the underpayment until orders were made by the court, which she acknowledged were made without opposition. Her Honour drew attention to the fact that the former employees concerned had been required to make affidavits in preparation for the trial. Due to the appellant's late notice of its lack of opposition, the former employees incurred an emotional burden of witness conferences and the expectation of being called to give evidence. 19 The contraventions occurred over a range of stores over the period from 27 February 2003 to 6 May 2004. They continued throughout the period of employment of the respective employees. The appellant is a large, national retail operation with a long history. No similar previous conduct was alleged. The appellant "strenuously resisted" efforts to secure voluntary compliance through education, the provision of information about the awards, and discussion and correspondence, both directly with the appellant and with its legal advisers. Her Honour concluded that the appellant had an "industrial strategy" involving a deliberate attempt to avoid its award obligations. The contraventions occurred with the knowledge of senior management. The appellant failed to cooperate with authorities, failed to comply with directions to file affidavits, refused to agree on facts to avoid the need for witnesses to give evidence, and did not communicate its intention not to oppose findings of breach until close to the trial. It would not consent to orders that it make payments, including payments of interest, although it did not oppose the making of those orders. 20 Her Honour described the appellant as having refused to acknowledge any contravening conduct. She drew attention to the appellant's failure to confirm that it was now meeting all award obligations and to the fact that it had resisted attempts on the part of the Office of Workplace Services to monitor the extent of its compliance with its industrial obligations since the orders were made on 16 October 2006. There was no evidence of remorse or contrition. 21 As well as the high need for specific deterrence, her Honour found, on the basis of affidavit material, that there was a high need for general deterrence. Applying s 178(2) of the WR Act (now repealed and replaced by s 719(2) of the WR Act), which provides that where two or more breaches of a term of an award by the same person arose out of a course of conduct by that person, the breaches are to be taken to constitute a single breach, her Honour identified 22 contraventions of the three awards. On the basis of a concession made by the respondent, her Honour found that these 22 contraventions fell into 11 categories of breaches. Her Honour then said: The totality principle requires a consideration of the overall conduct of the Defendant rather than a focus on the specific number of breaches. 22 After determining that the jurisdiction of the Magistrate's Court of Victoria was not limited to its usual $100,000, but that it could impose penalties up to $220,000 for the 22 contraventions, her Honour said: Taking in [sic] account the factors above I consider that a penalty of 80% of the maximum for each category of breach is warranted in all the circumstances. The total aggregate penalty will therefore be $88,000. 23 In his reasons for judgment at [95]-[97], Buchanan J sets out the authorities that have dealt with the manner in which the totality principle should be applied. I respectfully agree that the approach taken by Goldberg J in Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53 is to be preferred to that of Finkelstein J in CPSU, The Community and Public Sector Union v Telstra Corporation Ltd [2001] FCA 1364 (2001) 108 IR 228. What the magistrate was required to do in the present case was to determine an appropriate level of penalty for each contravention, as if it were a separate offence, and then to look at the aggregate of those penalties in the light of the overall conduct of the appellant, to form a view as to whether that aggregate was out of proportion to that overall conduct. 24 Her Honour went about the task in a different way. Having acknowledged the totality principle, she then appears to have applied it at the beginning of the process, by grouping the 22 contraventions into 11 categories of breaches. She did not revisit the application of the principle in relation to the aggregate that she determined in her conclusion. Unlike Buchanan J, but like Graham J, I do not think that the magistrate erred in regarding $8,000 as an appropriate penalty for each of the categories of contravention. There were 11 categories, but in reality there were 22 contraventions. In turn, those contraventions involved many other contraventions, but each of the 22 was treated as a single breach because the contraventions within it arose out of a course of conduct. There were many aggravating factors. The single mitigating factor was the lack of relevant prior conduct alleged against the appellant. In these circumstances, it could not be said that 80 per cent of the maximum penalty for each category of breach was outside of the appropriate range. It may have been at or near the top of that range, but it fell within it. 25 In my view, the magistrate did err in her conclusion, when she did not revisit the application of the principle of totality or proportionality. What her Honour ought to have done was to ask whether the figure of $88,000 was out of proportion to the appellant's overall conduct. The absence of this step in her Honour's reasoning leads to the conclusion that the exercise of her discretion miscarried.