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.