Communications, Electrical, Electronic, Energy, Information, Postal,... [2010] FCA 652 | Case summary

REASONS FOR JUDGMENT 1 On 11 June 2010, I made a declaration that on or about, but not later than, 22 January 2010 each respondent contravened a civil penalty provision for the purposes of s 539 of the Fair Work Act 2009 (Cth) (Fair Work Act), in that each contravened a term of a transitional instrument or instruments applicable to it, the said term and respectively applicable instrument or instruments being that or those particularised in the schedule to the order made that day. What follows should be read in conjunction with the reasons for judgment which I published on 11 June 2010: see Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591 (the principal judgment). A degree of repetition is necessary, both in light of the submissions that were made on penalty and to give emphasis to particular conduct which falls for consideration in relation to penalty, as well as to what I apprehend to be the purpose and rationale of the terms in question in the transitional instruments. 2 In summary, what I found was that QR Limited, which is the parent company of the other two respondents, Queensland Rail Limited (Formerly QR Passenger Pty Ltd) (QR Passenger) and QR Network Pty Ltd (QR Network) (collectively the QR respondents), had contravened 12 transitional instruments (industrial agreements) to which it was a party. I found that QR Passenger had contravened seven such instruments and that QR Network had contravened one. In each instance, the term of the transitional instrument contravened is the term providing for consultation. 3 The question to be determined today is what, if any, penalty is to be imposed? 4 I described the legislative scheme at para 6 of the principal judgment. What was stated there was that s 546 of the Fair Work Act provides for the imposition of a pecuniary penalty by the court in respect of the contravention, or a "civil remedy provision." Section 539 of the Fair Work Act defines what constitutes a civil remedy provision. Items 2 and 16 of Sch 16 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Provisions Act) have the effect that each of what I termed the QR agreements now operates, for the purposes of the Fair Work Act, as a transitional instrument. Item 2 of Sch 16 to the Transitional Provisions Act provides that a person must not contravene a term of a transitional instrument. Item 16 in that schedule makes that item 2 obligation a civil remedy provision for the purposes of s 539 of the Fair Work Act. Those items operate so as to permit an application to be made by a registered organisation to the Court under s 546 for a contravention of a civil remedy provision constituted by the alleged contravention of the QR agreements. 5 Some greater reflection on the scheme of the legislation is necessary in the context of penalty. As I have mentioned in the principal judgment, the effect of item 16 of Sch 16 of the Transitional Provisions Act is that the table which one finds appended to item 16 is taken to be included in the table that is appended to s 539 of the Fair Work Act. Read together, the Transitional Provisions Act and the Fair Work Act thus yield an additional item, item 40 in the table. That provides that the maximum penalty for a contravention of a term of a transitional instrument is 60 penalty units. Section 12 of the Fair Work Act, in its definition of "penalty unit," directs attention to s 4AA of the Crimes Act 1914 (Cth) (Crimes Act). Section 4AA of the Crimes Act provides that a penalty unit is $110. One then has to revert to s 546(2) of the Fair Work Act in the case of a body corporate. That subsection introduces a multiplier of five in the calculation of maximum penalty. 6 Thus, by a process of mathematics, 110 times 60 times 5, is derived a maximum per contravention of $33,000. 7 In turn, then, and as each party correctly submitted, one must have regard to s 557 of the Fair Work Act. There is a difference of views as between the parties as to the meaning and effect of s 557. It is necessary to resolve that difference for the purpose of determining penalty in this case. Absent a provision such as s 557, the number of contraventions involved in this case would run into many, many thousands, given the overall number of workers employed by the QR respondents. 8 Each party agreed that the contraventions arose out of a course of conduct by the QR respondents such that, at the very least, the effect of s 557 in this instance is that there could be no more than a total of 20 contraventions, spread across the QR respondents according to the number of transitional instruments to which each was a party. I agree that this is, at the very least, the effect of s 557. The real question is whether it has any greater effect? Does it have an impact, as was submitted on behalf of the respondents, such that each respondent should be taken to have engaged in but one contravention with a corresponding effect on the maximum total penalty applicable to each respondent? 9 First and foremost, it is necessary to look to the text of the legislation, the context in which that text appears and the general purpose and policy of the provision: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]. Section 557 is in these terms. (1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if: (a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person. (2) The civil remedy provisions are the following: [I shall not set those out in full. However, it is necessary to make reference to a particular provision in the Transitional Provisions Act.] (3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision. 10 Item 16 in Sch 16 to the Transitional Provisions Act provides materially: (1) Part 4‑1 of the FW Act applies as if: (f) subsection 557(2) included references to items 2 to 8 and 10 to 15 of this Schedule. 11 Going back to item 2 in that schedule, one sees, materially at item 2(2), the relevant obligation: A person must not contravene a term of an agreement based-transitional instrument that applies to the person. The note to that particular item, note 1, accurately recites: Note 1:This subitem is a civil remedy provision (see item 16, and Part 4‑1 of the FW Act). 12 Particularly for the applicant trade unions, much reference was made to earlier authority, concerning analogous provisions in earlier legislation. I do not propose first to consider those authorities. Rather, as I apprehend is counselled by Project Blue Sky, I intend to look first to the text of the legislation. I also do that because s 557, as affected by the Transitional Provisions Act, is to be construed and applied according to its terms, not under the "muffled echoes of old arguments concerning other legislation": see Commissioner of Taxation v Spotless Services Limited (1996) 186 CLR 404 at 414 and Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 276. 13 For the QR respondents, it is submitted that there have been multiple contraventions of the same civil remedy provision, whether or not it is the same transitional instrument or the same term of that instrument and one course of conduct. From this it is said to follow that s 557(1), as correctly construed, is engaged in a way which means that for each respondent, the contraventions are taken to constitute a single contravention. In other words, the maximum penalty on this construction of s 557 for each respondent is said to be $33,000. 14 The applicant trade unions take a different view, particularly directing attention to the language of items 2 and 16 in Sch 16 to the Transitional Provisions Act. I have already set out that language. 15 The applicant trade unions submit that there is one course of conduct in respect of each transitional instrument. Here, the civil remedy provision in question is an obligation not to contravene a term of a transitional instrument. QR Limited has contravened one term in each of 12 separate instruments, QR Passenger has contravened one term in respect of seven separate instruments and QR Network has contravened one term in the only instrument applicable to it. 16 In my view, the course of conduct must be associated with the particularised term of the particularised instrument. That is the contravention of the term of the transitional instrument. One does not look at course of conduct for the purposes of s 557 at a level of abstraction divorced from the contravened provision as particularised (ie the term in question and the transitional instrument in question). 17 Were s 557 to be read at the level of abstraction for which the QR respondents contend (in other words, the same provision, just looking at item 2(2) in its generality, a provision which is applicable to different terms in different instruments in particular cases) the result would be that different terms in different instruments, or different terms in the same instrument perhaps embracing quite different forms of conduct would all be assimilated as one. Each would just be a civil remedy provision. If the overall conduct gave rise to breaches of different terms, they would be treated as but one contravention. 18 That seems an odd result to me. 19 Especially that is so in light of s 557(3). That renders the otherwise beneficial effects of s 557 inapplicable if a penalty has already been imposed for a breach of a civil remedy provision. On the construction for which the QR respondents contend, if a person had contravened item 2(2) in respect of a term quite unrelated to consultation and in but one of the applicable transitional instruments, that person would be denied the beneficial effects of s 557(1). That seems to me to be a result contrary to the intendment of the provision concerned. 20 I note that like considerations would apply in respect of s 45 of the Fair Work Act in relation to terms of modern awards and in respect of s 50 of that Act in relation to terms of enterprise agreements. Again, it would seem an odd result to assimilate the outcomes of different terms in awards or enterprise agreements, one with another. In short then, the submissions of the QR respondents, as to the construction of s 557, would be subversive of the intendment of that provision, in my opinion. 21 Section 15AB of the Acts Interpretation Act 1901 (Cth) permits the Court to have regard to secondary materials, including explanatory memoranda circulated by the responsible Minister when introducing the bill which matures, in one way or another, into the Act in question, for the purpose of construing the Act. The permitted use is not just in case of ambiguity but also to confirm a meaning. 22 One can never use an explanatory memorandum as a substitute for the words that Parliament has chosen. One can use it, though, to resolve any ambiguity or to confirm a meaning. 23 In this case, there is some assistance, in my opinion, to be derived from the explanatory memorandum. Paragraph 2189 of the explanatory memorandum gives one example of the intended meaning and effect of s 557, para 2190 gives another. Those paragraphs provide as follows: 2189 For example, if a company contravenes a single term of a modern award in respect of ten employees, these 50 contraventions are taken to be a single contravention. This means that the maximum penalty that the Court can impose for the contravention is 300 penalty units. [I interpolate that the reference there to the number of penalty units relates to the number prescribed in respect of a contravention of a term of a modern award.] 2190 Similarly, if a company contravenes five separate terms on a modern award in respect of ten employees, these 50 contraventions are taken to be five contraventions. This means that the maximum penalty that the court can impose is five times a maximum penalty of 300 penalty units. 24 In my opinion, resort to this explanatory memorandum to the paragraphs I have quoted confirms the meaning that is otherwise apparent on the face of the language of s 557, read as affected by the Transitional Provisions Act. Especially that is so having regard to the example in para 2190. 25 There is no hint in the explanatory memorandum of any intention on the part of Parliament to cause any break with the past in relation to the operation of the course of conduct provision, s 557 in the Fair Work Act. Of course, it may be just that such a break occurred inadvertently. In this case, though, I doubt that there is any break with the past. One might have expected, given the age of course of conduct provisions, if there were to have been an intended break with the past, for there to have been express reference to that in the explanatory memorandum. One may trace the course of conduct provisions back to the insertion of s 119 (1A) into the Conciliation and Arbitration Act 1904 (Cth) (Conciliation and Arbitration Act) in 1970. 26 As it happens, the construction of s 557 which I prefer, which is not the construction promoted on behalf of the QR respondents, sits well with the understanding of the operation of the analogous provisions in earlier legislation, going back to s 119(1A) of the Conciliation and Arbitration Act. 27 I refer in this regard to the constructions of such provisions evident in the following cases: Quinn v Martin (1977) 31 FLR 25 at 30 - 31, Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503 at 507 - 508, Electrical Trades Union v Sims Products Limited (1988) 42 IR 250 at 253, Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223. I pause to quote from what was said in that case in respect of the construction of the then provision, which was s 178 of the Industrial Relations Act 1988 (Cth). At page 223, Gray J observed: The object of s 178(2) appears to be that a party bound by an award and pursuing a course of conduct involving repeated acts or omissions, which would ordinarily be regarded as giving rise to a series of separate breaches, should not be punished separately for each of those breaches. If such a party has pursued a course of conduct which gives rise to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another. This reasoning leads to the conclusion that each separate obligation found in an award is to be regarded as a "term", for the purposes of s 178 of the Act. The ascertainment of what is a term should depend not on matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out. For these reasons, I incline to the view that each separate obligation imposed by an award is to be regarded as a "term", for the purposes of s 178 of the Act. If the different terms impose cumulative obligations or obligations that substantially overlap, it is possible to take into account the substance of the matter by imposing no penalty, or a nominal penalty, in respect of breaches of some terms, but a substantial penalty in respect of others. 28 I return to the list of cases: Kelly v Fitzpatrick (2007) 166 IR 14 at 17 at [11] and Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at 367 - 368 at [32] and [33] per Gray J (I note that Branson and Lander JJ did not deal with the point in that case). The latter two cases, in other words, Kelly v Fitzpatrick and Plancor v LHMU, arose under the former Workplace Relations Act 1996 (Cth). The language of that Act in s 719, and the reference therein to "applicable provision" (as to which, see s 718) is very similar to s 557, s 546 and s 539 of the Fair Work Act. Tracey J in Kelly v Fitzpatrick and Gray J in Plancor v LHMU were each well aware of the differences in language as between s 719 and earlier course of conduct provisions, yet each regarded the approach to construction of those provisions as relevantly a continuum. So do I, in relation to the present s 557 of the Fair Work Act. 29 The effect of construing the Fair Work Act as contended for by the applicant trade unions, which I regard as the correct construction, yields the following results as to maximum penalty for: (a) QR Limited, a maximum of $396,000; (b) QR Passenger, a maximum of $231,000; and (c) QR Network, a maximum of $33,000. 30 Even though s 557 yields these as the maximum penalties, I have taken into account, for the purpose of imposing penalty, whether this is one of those cases where an overall course of conduct yields what are strictly separate but not unrelated types of contraventions. Care must be taken in such situations not to over-penalise by aggregation what is truly one course of conduct. Just such sentiments are evident in the closing part of the observations made by Gray J in Gibbs v City of Altona, in relation to overlapping terms of awards, each of which may have been breached. That type of phenomenon is not unique to industrial law nor to civil penalty provisions in other statutes. It is also well known in relation to the criminal law. 31 I do not consider the present to be that sort of case. The point may be illustrated by an example taken from a regime in respect of civil penalties under the Customs Act 1901 (Cth) in circumstances where a person who is a smuggler employs means which are indicative of evasion of customs duty and the making of false statements of officers of customs. Overall, what is revealed in that type of situation is one course of conduct but a course of conduct which yields what are, strictly speaking, separate contraventions. In that type of circumstance, care needs to be taken, as I have indicated, to ensure that what is truly an overall course of conduct is not over-penalised by aggregation. 32 Here, the contraventions are of the same type, but they are related only in the sense that they are of the same type. Each relates to a discrete group of workers bound by a discrete agreement and to discrete parties to that discrete agreement. It is just that the failure to consult, for reasons which I set out in the principal judgment, is so comprehensive that it embraces the entire workforce. That, though, is no reason to engage in the process exemplified in those comments of Gray J of trying to avoid by aggregation an over-penalisation. 33 I consider that I am bound to follow the approach counselled by Branson and Lander JJ in their joint judgment in Plancor v LHMU at [57] - [62]. One finds there a very lengthy and learned analysis of penalty considerations applicable to the type of case with which I am faced today. In view of the length of those passages and the desirability, given the imminence of change as far as the QR respondents are concerned, of giving judgment today, I do not propose to read out what is there stated by their Honours, but I expressly take it into account all of what is there stated. 34 In particular, I would emphasise the following. Their Honours make reference to a list of considerations set out by Tracey J, by reference to an earlier decision of the Federal Magistrates Court, in his judgment in Kelly v Fitzpatrick. It is evident from his Honour's judgment in that case that he well recognised that the list of considerations set out there was not exhaustive. In Plancor v LHMU, particular emphasis is given in the joint judgment to an observation which Buchanan J made in an earlier case: Australian Ophthalmic Suppliers v McAlary-Smith (2008) 165 FCR 560 at [91]. His Honour was there referring to checklists of considerations of the kind set out in Kelly v Fitzpatrick. He stated: [91] Checklists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. 35 Thus, whilst the considerations that are described in Kelly v Fitzpatrick are helpful to the extent relevant in a particular case, the considerations described by Buchanan J in the Australian Ophthalmic Suppliers case must be paramount. 36 In the principal judgment, I observed of what I termed the QR agreements that they were not merely private contracts. The obligation to comply with the terms of those transitional instruments was a matter of Federal Law. There is in this case a wider public interest at play. Parliament has recognised a public interest in requiring adherence to an industrial bargain. 37 It is not hard to see why; the alternative is a form of industrial anarchy, where the strong, be it union or employer, may oppress the weak. It is vitally important in such a circumstance that an obligation created by Parliament to honour an industrial bargain is vindicated and seen to be vindicated. 38 The applicant trade unions submitted that the public interest was even stronger where the industrial instrument concerned was not an arbitrated award, perhaps one imposed notwithstanding particular submissions of a party, but rather, a consensual agreement. The obligation to obey, though, created by Parliament, is the same. It is for all that significant that the obligation is related to a consensually reached agreement. I would not wish, though, to be thought, by making that observation, that there is any lesser obligation to obey the terms of, for example, a modern award. It is just that the severity of a transgression is certainly not lessened by the relationship between the obligation and a consensually reached industrial agreement. 39 The public interest in adherence to obligations imposed by statute in industrial relations matters is one of very long standing. There is a need, continually to remind successive generations of those who are employers and workers, of that obligation, lest lessons of the past be forgotten. I intend in this case to give such a reminder. 40 The QR agreements were of sufficient importance to the employer to warrant express reference by QR Limited in its annual report for 2008/2009-Building our Future. What QR Limited had to say in relation to its workplace agreements in its annual report at page 47, under the heading "Workplace Agreements" was a follows: QR (that is, QR Limited, and it necessarily embraces the other two respondents, which are but subsidiaries) made a fundamental shift in its industrial framework during the year, designed to support the corporation's vision. This involved negotiating greater flexibility in working arrangements and promoting "ownership" of industrial agreements at the local workplace. The end result is a framework that is more streamlined, focused on customer outcomes, and attuned to the specific needs of different businesses. [Emphasis added] By way of explanation, the annual report continues: The corporation's previous framework was a two-tier arrangement consisting of an enterprise agreement (EA7) and more than 40 subsidiary agreements. EA7 expired on 30 September 2008, and in its place, QR successfully negotiated a single tier framework of 20 business specific union collective workplace agreements … covering parent company QR Limited and new subsidiaries QR Network Pty Ltd and QR Passenger Pty Ltd. Acquired Subsidiaries such as ARG and CRT remain under separate workplace agreements. The new workplace agreements provide easily understood core conditions and an overall range of employment conditions tailored to reflect the considerations of employees' daily work and the relevant business drivers, objectors and environment. QR will drive application of the workplace agreements to ensure their potential to deliver business efficiencies and improved customer outcomes is being realised. [Emphasis added] 41 It is not evident from the passage quoted from the annual report that the number of workplace agreements was, as was submitted on behalf of the QR respondents, dictated by the number of unions. Nonetheless, I accept that that is a particular refinement or subtlety of industrial relations law and practice that one may well not find reposing in the generality of a statement in an annual report, but may well reflect a particular negotiating reality in the circumstances then obtaining. Those circumstances, I note, did include what was described in a general but not inaccurate way as the "Work Choices" environment. 42 For all that, the end product was, as the annual report correctly states, 20 workplace agreements (transitional instruments - the QR agreements) which were, at least in part, again as the annual report states, tailored to meet particular business needs of the Queensland Rail group of companies. 43 Also evident from the passage quoted from the annual report is the brief, separate life of QR Network and QR Passenger. As I detailed in the principal judgment, these particular respondents are but recent creations brought into existence in a plenary way by powers which one finds vested in the Executive Government in respect of government-owned corporations. They are truly but subsidiaries of QR Limited. 44 In turn, QR Limited, for reasons which I detail in the principal judgment, is the exact successor in law of the Commissioner for Railways. QR Limited thus has a history of almost 150 years. Over the course of that almost century and a half, what is now QR Limited has grown progressively to a situation where, through their shareholding ministers, the people of Queensland have, in QR Limited, according to its most recent annual report, an organisation which overall has revenue of 3.970 million, fixed assets of 12.081 million, an organisation which has in excess of 700 locomotives, 15,000 wagons, in excess of 680 services wagons, in excess of 15,000 employees, a track network of 10,000 kilometres and an operation of in excess of 1000 train services per day. (See p 6 of the annual report) 45 In its present form, QR Limited represents a particular trend in public administration, which is ownership by shareholding ministers of what is, strictly speaking, a public company, but a public company subject to all of the requirements of a government-owned corporation. There are very particular and perhaps peculiar obligations which attend the management of such a corporation. To external view, it appears as if it is but a public company competing in the marketplace. That is part of a deliberate intendment in the government-owned corporations legislation to encourage competitive behaviour on the part of organisations which are, on analysis, publicly owned. In that public ownership, there is a particular and peculiar susceptibility on the part of management to political value judgements held by shareholding ministers on behalf of the government of the day. 46 In deciding to create government-owned corporations such as Queensland Rail and then for those organisations to subject themselves to federal obligations, there is potential for tension between the freedom of action otherwise enjoyed by the Executive Government and obligations which arise outside State law, in this instance, an obligation under federal law to obey the terms of a transitional instrument. The obligation which attends QR Limited and its subsidiaries, under federal law, is no different to an obligation that attends any other public company the shareholding in which might be very widely distributed indeed. It is just that the shareholding in QR Limited is not widely distributed and is held by political officers. 47 It is very important, in such a circumstance, that a board, a chief executive, executive general managers and senior managers appreciate that there is a necessary distance between themselves and shareholding ministers, in terms of a need to obey the federal law as well as to take into account the particular dictates of shareholding ministers. This case, in my opinion, is one which has an importance about it, in terms of reminding those in control of government-owned corporations, at a managerial level, of the need to look to the obligations that arise under federal law as well as the very real obligations that exist in respect of government-owned corporations at a State level. 48 I turn to consider the purpose of the terms in the QR agreements concerned. In that regard, a degree of repetition is necessary, by reference to the principal judgment. For reasons that I set out there, I observed, at para 57, that, in construing any clause in an industrial instrument which addresses the subject of change in the workplace, the industrial context, having regard to the heritage of such clauses in the Termination, Change and Redundancy Cases (see: Termination, Change and Redundancy Case (1984) 294 CAR 175 and Termination, Change and Redundancy Case (No 2) (1984) 295 CAR 673), necessarily includes an understanding of the central importance of employment as a source of income for most Australian families. It is not just in the interruption of employment that at least the fear of financial hardship and loss of settled daily routine and the society of the workplace may arise. The introduction of change in a workplace, be it occasioned by advances in technology, restructuring, reorganisation or otherwise, can also engender such fears in workers. It is quite apparent to me, having regard to the evidence of particular workers, which is gathered in exhibit 1 in the penalty hearing, that just these type of fears were at play in the workforce of QR respondents. I doubt, strongly, whether the views of the workers in exhibit 1 are isolated views. That would be quite inconsistent, in my opinion, with the course of human experience in relation to radical change. Some do embrace it but many, very many, are apprehensive. 49 A purpose of a consultation clause is to facilitate change where that is necessary, but to do that in a humane way which also takes into account and derives benefit from an interchange between worker and manager. These clauses involve a recognition that good workplace relations and indeed, good management in modern times, benefits from consultation with a work force and the interchange between worker and management. 50 That this type of benefit may be present in consultation clauses was, I thought, evident from observations which were made by the International Labour Organisation (ILO) in relation to international conventions in respect of types of change in the workplace. At para 65 of the principal judgment, I made reference to the following commentary in the Note on Convention No. 158 and Recommendation No. 166concerning termination of employment, in respect of Art 13 of ILO Convention No 158: In August 2005, the International Finance Corporation's Good Practice Note on Managing Retrenchment stressed the importance of consultations to both the development and the implementation of a retrenchment plan. The Good Practice Note states that "without consultation, companies run the risk of not only getting key decisions wrong, but also of breaching legal rules and collective agreements and alienating workers and the community. Workers can often provide important insights and propose alternative ways for carrying out the process to minimize impact on the workforce and the broader community" [Footnote reference omitted, emphasis added] 51 This case, of course, does not concern retrenchments but, rather, a radical change in the form of partial privatisation, but the comments made in respect of the benefits that can be derived from consultation are, in my opinion, comments that are apt in relation to a benefit to be gained from adherence to the consultation clauses in these particular industrial agreements. 52 What QR Limited and its subsidiaries did was to deny themselves, their workers and the wider community the benefit of consultation. That there were or that there may have been very real benefits was, I thought, demonstrated by changes that had to be made as a result of feedback that occurred after a final decision had been made in the absence of consultation. I refer to those in the principal judgment (see para 117-134). That there were additional benefits that might have been gained had there been, at the request of workers and perhaps with the encouragement of a management concerned with how pragmatically to consult with a work force of many thousands, consultations with unions, is also evident from the brief opportunity that was given to the applicant trade unions to offer views in the day or so that passed between the making of a final decision and the dispatch of thousands of letters. Whether or not there were greater benefits is a subject which is lost to history by virtue of the conduct of the QR respondents. 53 In the principal judgment, for reasons which I set out, the conclusion which I reached was that QR Limited and its two subsidiaries, had failed utterly to consult with their workers. What was particularly revealing was the following a question and answer, which was drafted for the purpose of "roadshows" and reflected notes of questions taken by workers and responses given. They relate to the process by which workers would be allocated or not allocated to either the new Queensland Rail, which would be government owned, or the new Queensland National, which would be privatised: Will employees be involved in the decision? Answer: The people resourcing team will have a first crack at this and at the end of January, we'll get feedback from individuals. 54 I observed in the principal judgment (at para 100), that, in the reference to "first crack" in this answer, one finds an accurate reflection of the policy of the QR respondents. Indeed, those employers did not just have the "first crack". They had the only "crack". It is quite evident from that answer and the conduct of the QR respondents' defence that their conception of "consultation" was feedback after a final decision had been made. It is true, as I observed in the principal judgment, that there was extensive, intensive and genuine provision of information, but that was not information in the context of a consultation process. 55 The only consultation that occurred before a final decision was made was in‑house managerial consultation, not consultation with workers. There was no consultation with workers about where they might end up, where they wanted to end up, let alone about the process by which such a decision would be made, and let alone, strictly, about the proposal to privatise itself. 56 There was reference on behalf of the applicant trade unions to the absence from the witness box of the chief executive officer of QR Limited, Mr Hockridge, and also the absence of another gentleman, who on the evidence played an advisory role, Mr Bacon, a former industrial commissioner. It was put that there was to be inferred an absence of bona fides in this. I expressly do not draw any adverse inference against Mr Bacon or Mr Hockridge based on an absence from the witness box. I must judge the case on the evidence that is before me. That does include an absence of someone who seems to be a key adviser and absence of an obviously key decision-maker, but that is as may be. There is, insofar as the conduct of the defence is concerned, evident no different view from either of these gentlemen, but that is all. 57 It was also put that I ought to reach views about the honesty of the various workplace relations and human relations officers who gave evidence, as well as Mr Scurrah, the executive general manager of QR Passenger. I have referred in the principal judgment to what I termed some idiosyncratic views about what was being effected by the people resources team and the adoption of the recommendations that came from that team. I did not regard the QR managerial officers who gave evidence as giving dishonest evidence. 58 Overall, though (and this necessarily reflects an impression of those who did give evidence for the respondents) it seems to me that there was a closing of eyes to the obvious, what some might term a blindness, a wilful blindness, in relation to what was occurring. 59 It is very important, as was, with respect, rightly emphasised by counsel on behalf of the QR respondents, not to reach such a conclusion with the wisdom of hindsight. I have endeavoured, as best I can, not to do that in making that observation as to blindness, closing eyes to the obvious. Rather, what I have tried to do, is to look at the matter in prospect. 60 Looked at in prospect, what I see is this: the phenomenon of privatisation, partial or otherwise, is not unknown in railways. I gave examples by reference to statutes here and abroad of that. More generally, privatisation itself is hardly novel in contemporary Australian experience. All of us can remember Qantas as a publicly owned organisation, and the same with the Commonwealth Bank and Telstra, to give examples. In each of those, be they in railways or otherwise, though, privatisation involves radical change, a radical break with the past. 61 Having regard to the history of QR Limited, which I set out at some length in the principal judgment, and it necessarily embraces each subsidiary, the partial privatisation of railways was a radical break with the past in this State. Even having regard to the announcement made by the Premier on 8 December 2009, and certainly by the time the people resources team recommendations were adopted, what was occurring was an effective doubling of QR Passenger and the wholesale abolition or creation of thousands and thousands of positions. All of that was very evident in prospect. It is not hindsight to regard what occurred here as a closing of eyes to the obvious. 62 The annual report of QR Limited offers a reminder about how radical the change proposed was, in the description of "Employment" on page 47: As a major Australian corporation, QR employs over 15,000 people at more than 500 locations across the country, from Cairns to Perth. Then the following is stated: With a growing national footprint and more than 1,500 positions located outside our home state of Queensland, QR offers excellent employment and development opportunities for its people. More than 75 per cent of QRs people are employed in operations, trades, and construction and in businesses where there are strong growth opportunities. These include resources sector, general freight, and the passenger market. Ultimately, QR aspires to be the employer of choice in the transport industry and the broader job market. It offers an outstanding range of professional opportunities across 300 job categories. You can drive a two‑kilometre long coal train, be at the cutting edge of engineering design, or in a frontline customer service role on QRs suite of traveltrains. During 2008/2009, QRs recruitment centre processed more than 34,000 applications for over 2000 positions and reduced our full-time rate to 31 days. The centre reduced reliance on recruitment agencies and resulted in savings for the organisation. QR is witnessing rejuvenation across its ranks while ensuring retention of its renowned operational and technical excellence. This is illustrated by the fact that one third of QRs employees - some 5000 people - have been with the company for one to four years. At the other end of the spectrum, and where company loyalty is strongly evident, about half have been with QR for 20 years or more. 63 It is that employment, that organisation that has been broken up by the privatisation. It is truly radical change, and it is obvious change, change that, in my respectful opinion, was obviously intended to be the subject of the type of consultation for which the QR agreements provide. Not to appreciate that is to close one's eyes to the obvious. The changes are radical across the whole group. They are radical for QR Limited as well as for each subsidiary. 64 It disturbs me, with respect, somewhat that it is put separately, on behalf of QR Passenger, that in some way, its position is different. It is not. It was part of an integrated group, the whole of which had all of the virtues extolled in the annual report in the passage that I have quoted. The obligation to consult fell just as much with respect to the workers in QR Passenger as it did generally across the whole of the group. 65 I emphasise, as I did in the principal judgment, that the merits of breaking up, of realising, in part, the asset represented by QR Limited, is a political value judgment which is not justiciable. That is truly a matter for ministers answerable to Parliament and, in turn, for a Parliament answerable to the electorate. 66 In the face of radical change, to exclude workers from consultation is a very, very serious contravention. I regard the present as a paradigm case where consultation was required. There is a convenience about the approach that QR Limited and its two respondent subsidiaries adopted, a convenience about closing one's eyes to the obvious, that yields an absence of a need to draw to the attention of shareholding ministers the presence of such an obligation, with the necessary and, perhaps, beneficial delay that might bring with it. 67 There is no evidence in this case, obviously, because eyes were closed to the obvious, that a need for consultation and the corresponding obligation under federal law was drawn to the attention of the shareholding ministers concerned. Rather, there seems to have been what I have called a closing of the eyes to the obvious, which was convenient, and then an expeditious adherence to the wishes of the shareholding ministers. Boards, chief executive officers, executive managers and senior managers of government-owned corporations, as I have earlier indicated, need to take particular care not to defer uncritically to the wishes of shareholding ministers in the face of wider obligations, particularly those arising under federal law. 68 As far as the QR respondents are concerned, it is true that there is no evidence of any previous contravention. Absence of previous contraventions is a factor which is routinely and rightly regarded as a mitigating factor. It does not mean, in the face of a serious contravention, that the contravention is not to be regarded as serious. 69 It was put on behalf of the QR respondents that there had been cooperation. It is true, and I acknowledge that, there has been procedural cooperation. Each of the parties, the trade union applicants and the respondents, engaged in commendable behaviour in the conduct of litigation, which allowed a case which truly required expeditious disposition to be disposed in that way. I do take that into account. 70 However, cooperation of the kind that resonates greatly in relation to penalty is cooperation evident in insight into contravening conduct, evidenced by apology and a timely admission of liability. QR Limited is, as it is entitled to be, unapologetic, as are its subsidiaries. Here, QR Limited and its subsidiaries, as they are truly entitled to do, have chosen to contest the question of contravention. The absence of any admission of liability is most certainly not an aggravating factor. All that is present here is an absence of that kind of cooperation which is customarily regarded as a discounting factor. 71 It was also put, on behalf of the QR respondents, that measures had been put in place to ensure that the conduct concerned was not repeated, even though QR Limited and its subsidiaries were of the view that there had been no contravention. That was put on behalf of the company by Mr Stephens, its chief human resources officer. He was not cross-examined on this and I accept his evidence. I take that into account. I would expect no less from a senior and experienced officer in a public company. It is a mitigating factor but, perhaps, a factor of short duration, given the impending break-up of the group for which he, at least for another week or so, has an overall responsibility. 72 On behalf of the QR respondents, attention was drawn to a number of comparatives. They were scheduled to the outline of submissions on behalf of QR Limited and QR Network and adopted on behalf of QR Passenger. I have taken those into account. However, as was acknowledged, with respect, correctly, on behalf of the respondents, these comparatives, so-called, do not evidence a frequency of encounter of this type of contravention such as would enable one to see a discernible sentencing pattern. That type of situation arises very frequently in relation to, in the criminal justice system (and I emphasise these are civil penalty, not criminal, proceedings), offences such as drink driving, types of shoplifting, and even more serious offences in the criminal calendar. There is not such a pattern evident in relation to consultation contraventions. Given that, very great care indeed needs to be taken in relation to earlier civil penalty decisions, lest the exercise descend into one of mere comparison rather than focusing on the conduct in the particular case. 73 I do feel obliged, given the submissions made on behalf of the QR respondents, to make particular reference to an earlier judgment of mine in relation to National Tertiary Education Industry Union v Central Queensland University [2008] FCA 481. There was, there, a more modest penalty outcome to that which I propose in this case. The circumstances were very different. There was genuine contrition, evidenced by a timely plea of guilty. There was obvious embarrassment to the chief executive officer, who gave evidence at the penalty hearing, in what had occurred. There had been no ignoring in that case of a need to consult, but rather a conflation of quite differently worded obligations. 74 Here, the contraventions concerned were flagrant, they were all embracing, and they occurred in the most obvious and compelling circumstances for which a consultation clause was designed. There is, in my opinion, a very strong need for general deterrence and to uphold the integrity of an obligation under federal law in respect of these terms. The need for specific deterrence is moot. I have already referred to Mr Stephens' evidence, as well as the impending break-up of the group concerned. Further, I do not doubt that, even though there is absence of apology on the part of QR Limited, the experience of litigation has itself had scarifying qualities. 75 I have considered whether QR Passenger should be treated differently, but for reasons which I have given, I do not consider that it should be. Its workers were just as entitled to be consulted about where they wished to end up, how they wished to have the process conducted as anyone else. It seems to me that the making of a separate submission on behalf of QR Passenger evidenced a lack of insight into this. That is hardly a mitigating factor. 76 Having regard to all that I have mentioned, my opinion is that each individual contravention calls for the maximum penalty. It is hard to imagine a worse case in terms of fundamental change in this organisation. 77 Having said that, that particular view must be tempered by the totality principle which applies in relation to the awarding of penalties. I shall come to that shortly. Before so doing, it is necessary to make some particular reference to what, in my opinion, are lessons to be translated from the criminal law jurisprudence in relation to the imposition of a maximum penalty. In that regard, I adopt sentiments evident in the judgment of Sir Charles Wanstall when Senior Puisne Judge, (later Chief Justice of Queensland), with which the then Chief Justice, Sir Moystn Hanger and Matthews J agreed in R v Manson [1974] Qd R 191 at 202. His Honour said this in respect of the sentence imposed in that case, which was under appeal: I am not in the least attracted by the argument that the maximum penalty should never be imposed because the sentencing court cannot be sure that some day there will not be a worse case. Though that may be true it is irrelevant. This case is bad enough to justify the imposition of the maximum penalty - its evil is sufficient unto this day; let the morrow take thought for the things of itself. If its case should be even more evil the precedent of this case will be relevant and helpful. 78 I have taken that principle into account, which I note has been adopted in more recent times in Queensland by the present Chief Justice of this Court, Keane JA (as his Honour then was) when sitting in the Court of Appeal in R v Robinson [2007] QCA 99 at [38], with the agreement of Williams JA and Muir J. 79 Having so derived the maximum penalty, I then turn to the totality principle. As to that, I prefer an approach evident in the judgment of Goldberg J in a case ACCC v Australian Safeway Stores Pty Ltd (No 4) [2006] ATPR 42-101 where his Honour said at [82] and [83]: The "totality" principle requires the court, after determining an appropriate … penalty for specific … contraventions in accordance with proper principles, to review the total of the … penalties and consider "whether the aggregate is just and appropriate". … The totality principle finds its genesis in the criminal law but it has been applied in the context of fixing penalties for contraventions of the [Trade Practices] Act … I have … borne in mind the totality principle. That is, I have ensured that having determined an appropriate penalty for each contravention, I have as a check considered whether the aggregate is appropriate for the various acts of contravening conduct involved. 80 I turn to the question as to whether, having regard to the totality principle, what I should do in respect of the aggregate penalties, in respect of each of the corporations concerned. In my opinion, this change is so radical, the breach so comprehensive, and the occasion for consultation so obvious that anything less, even considered in aggregate, than an aggregate of the maximum penalties would not do justice to the circumstances of the case and the need to ensure public confidence in adherence to industrial bargains. For that reason, the penalties that I propose to impose by order on these respondents will be the aggregate maximums that I have mentioned earlier in the reasons. 81 I turn then to consider what to do in relation to those penalties. I expressed views on that subject, which concurred with earlier views expressed by Wilcox J, in my judgment in the NTEU v CQU case. The subject is one which received attention in the joint judgment of Branson and Lander JJ in the Plancor v LHMU case, albeit, with respect, without the reaching of a definitive preference one way or the other in that case about a concern which had been voiced by Finkelstein J in an earlier case, Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at [22] - [28]. 82 In my respectful opinion, when one has regard to a very long history in industrial relations legislation of provision for trade unions to bring applications of the present kind, it is, with respect, a misconception to look to windfall just as much as it is a misconception to regard any order in favour of a trade union as compensatory. The term that is used for this type of proceeding, brought by someone other than an officer of the executive government, is a proceeding brought by a common informer. There may, perhaps, unless the detail of what lies behind that description is understood, be thought to be a pejorative quality in that terminology. There truly is not. Rather, what it is, is the bringing to the attention of the courts of a transgression of a public obligation. 83 In industrial law, there is a very particular benefit in that occurring for the community, so that the need for adherence to obligations can be brought home more widely. In bringing the present proceedings, the applicant trade unions have done a singular service not just to their members and other workers in QR Limited and its subsidiaries, but also to the wider community. 84 It was put, on behalf of the QR respondents, that it should be regarded as some sort of disentitling or discounting factor on the question of whether to make an order in favour of the applicant trade unions, that this proceeding was, and had been stated to be, part of a campaign on behalf of various trade unions against privatisation. So it may well be. There is certainly evidence of that. But that does not detract from the drawing to the attention of the Court of what has been found to be a very serious and flagrant contravention of a very important modern workplace right. In some cases, it has been said that it is the usual order to make an order in favour of trade unions. Each case, I think, has to be regarded on its merits. A trade union (or, for that matter, an employer organisation or employer which might inform), may render a particular service in circumstances where, even though a government officer such as an inspector might be permitted to bring a proceeding, for one reason or another, the executive government chooses not to do that. 85 I see no reason why there ought not to be an order in favour of the allocation of the penalties concerned to the applicant trade unions. They have brought the proceedings in a joint way. It was not submitted on their behalf that there ought to be any special distribution of penalty as between them. I therefore propose to order that the penalties concerned be divided equally between them. 86 In summary, then, at a time when its workers most needed to be consulted, those workers in QR Limited and its subsidiaries were let down, and badly let down, by those in senior management. In so doing, and having regard to the purpose of consultation, which I have mentioned, QR Limited and its senior managers let themselves and the company, both parent and subsidiary, down also. It is very important to ensure that that type of behaviour does not happen again in the context of the radical breaking up of a group. 87 The orders that I make, therefore, are as follows. 1. In respect of QR Limited, I order that it pay a pecuniary penalty in the sum of $396,000. 2. In respect of QR Passenger, I order that it pay a pecuniary penalty in the sum of $231,000. 3. In respect of QR Network, I order that it pay a pecuniary penalty in the sum of $33,000. 88 As to the pecuniary penalties so ordered, I order that, in each instance, that amount be divided equally as between the applicants and paid by each respondent to each applicant accordingly. 89 There remains then a question, as foreshadowed yesterday by me, with respect to access to materials in the case. In that regard, O 46 r 6 of the Federal Court Rules provides, in subrule 6(2), for particular types of documents to be available for search as of right, unless the court has ordered that a particular document be confidential. 90 There is no such order in place here, so that there is no need, then, for an order in respect of the originating application, notice of appearance, the pleadings, the earlier judgment or order and the filed written submissions. There is, though, a need, in my opinion, in this case, for a particular order in respect of affidavits that were filed and read in the proceedings and, in so far as retained in the Registry, exhibits. I note that that question having been drawn to the attention of the parties, there is no objection by any party to the making of an order which would permit the searching in the registry in relation to affidavits which were filed and read in the proceeding and exhibits. 91 I therefore propose to make orders accordingly. 92 The further order I make then is that the operation of the penalty orders concerned be stayed for a period of 21 days from today, or such further or other period as the court or a judge may specify. 93 I direct that the applicants bring in short minutes of orders in respect of the orders made today, and do so after consultation with the respondents. I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited

At a glance

Court

Decision date

Before

Source

Judgment (30 paragraphs)

Parties

Legislation Cited (9)

Cases Cited (14)

Cited By (24)