Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Limited

REEVES J: 1 In September 2015, I delivered my judgment in relation to the liability aspects of this matter: [2015] FCA 1014. These reasons are concerned with the remaining issues of penalty and relief. In these reasons, I will adopt the same nomenclature as in my liability judgment. 2 From the written and oral submissions of the parties, the four remaining issues are: (a) the form of the declarations that are to be made; (b) whether a reinstatement order should be made and, if so, in what form; (c) the appropriate pecuniary penalty to be imposed on Clermont Coal Pty Limited (Clermont Coal) for its contraventions of the Fair Work Act 2009 (Cth) (the FWA); and (d) whether an order should be made that the pecuniary penalty imposed be paid to the Construction, Forestry, Mining and Energy Union (CFMEU). I will address these issues in the order set out above.

The form of the declarations 3 Mr Scott contended that the declarations should contain the details of Clermont Coal's contraventions of the FWA. He submitted this served the public interest in indicating the Court's disapproval of the particular conduct and so that the public is made aware of precisely what conduct the pecuniary penalty order seeks to deter. Accordingly, he proposed the following set of declarations which, he contended, properly reflected the findings in the liability judgment: 1. Clermont Coal Pty Ltd (the Respondent) contravened sections 340 of the Fair Work Act 2009 (Cth) by taking adverse action against the Second Applicant within the meaning of item 1(a) of the table in section 342, namely, the company dismissed the Second Applicant, because: (a) In and about 2012, Mr Scott had a workplace right within the meaning of sections 340(1)(a)(i) and 341(1)(a) of the FW Act in that he had a role or responsibility under a workplace law or workplace instrument arising from being nominated by the first applicant to represent it, being a bargaining representative either by default and/or by being nominated for the Clermont Coal Enterprise Agreement 2012, an enterprise agreement proposed to be made under the FW Act; (b) In and about 2012, Mr Scott exercised a workplace right within the meaning of sections 340(1)(a)(ii), 341(1)(b) and (2)(e) of the FW Act in that he participated in a process or proceedings under the FW Act as he was a representative of a bargaining representative for the Clermont Coal Enterprise Agreement 2012, an enterprise agreement proposed to be made under the FW Act; (c) After 12 December 2012, from time to time, Mr Scott had a workplace right within the meaning of sections 340(1)(a)(i) and 341(1)(a) of the FW Act in that he had a role or responsibility under a workplace law or workplace instrument arising from being the representative of choice of other employees under clause 4 Dispute Resolution of the Clermont Coal Enterprise Agreement 2012, an enterprise agreement made under the FW Act; (d) After 12 December 2012, from time to time, Mr Scott exercised a workplace right within the meaning of sections 340(1)(a)(ii), 341(1)(b) and (2)(j) of the FW Act in that he exercised a role or responsibility under a workplace law or workplace instrument arising from participating in dispute settlement proceedings by representing employees as the representative of their choice under clause 4 Dispute Resolution of the Clermont Coal Enterprise Agreement 2012, an enterprise agreement made under the FW Act; (e) From 10 September 2013 and continuing in 2014, Mr Scott had a workplace right within the meaning of sections 340(1)(a)(i) and 341(1)(a) of the FW Act in that he had a role or responsibility under a workplace law or workplace instrument arising from being nominated by the first applicant to represent it, being a bargaining representative either by default and/or by being nominated for the Clermont Coal Enterprise Agreement 2013, an enterprise agreement proposed to be made under the FW Act; (f) From 10 September 2013 and continuing in 2014, Mr Scott exercised a workplace right within the meaning of sections 340(1)(a)(ii), 341(1)(b) and (2)(e) of the FW Act in that he participated in a process or proceedings under the FW Act as he was a representative of a bargaining representative for the Clermont Coal Enterprise Agreement 2013, an enterprise agreement proposed to be made under the FW Act; and/or (g) On 22 September 2014, Mr Scott exercised a workplace right within the meaning of sections 340(1)(a)(ii) and 341(1)(c)(ii) of the FW Act in that he was able to and did make a complaint or an inquiry as an employee in relation to his employment with the Respondent by making statements to the Respondent's Mr Dawid Pretorius (General Manager - Operations Clermont Open Cut) at the Respondent's State of Nation meeting and at a subsequent meeting in the Respondent's Boardroom. 2. The Respondent contravened sections 346 of the Fair Work Act 2009 (Cth) by taking adverse action against the Second Applicant within the meaning of item 1(a) of the table in section 342, namely, the company dismissed the Second Applicant, because: (a) Mr Scott was an officer of an industrial association within the meaning of sections 12 and 346(a) of the FW Act, namely, he was a union delegate or other representative of the applicant which is an industrial association, the President of the applicant's CFMEU Clermont Open Cut Lodge and a member of that Lodge Committee; (b) Mr Scott was a member of an industrial association within the meaning of section 346(a) of the FW Act, namely, he was a member of the applicant; (c) Mr Scott engaged in industrial activity within the meaning of section 346(b) and 347(a) of the FW Act, namely, he remained an officer of the applicant; (d) Mr Scott engaged in industrial activity within the meaning of section 346(b) and 347(a) of the FW Act, namely, he remained a member of the applicant; and/or (e) Mr Scott engaged in industrial activity within the meaning of section 346(b) and 347(b)(v) of the FW Act, namely, he represented or advanced the views, claims or interests of an industrial association, namely, that of the applicant and the applicant's members. 4 Clermont Coal contended that the declarations should only contain the "gist of the contraventions". It submitted that it is its contravening conduct and not all the particulars of the industrial activities and workplace rights that should be set out in the declarations. It therefore proposed the following, more truncated, set of proposed declarations: 1. By its conduct on 14 November 2014 in dismissing Mr Alan Scott from his employment because he had and/or exercised a 'workplace right' within the meaning of section 340(1) of the Fair Work Act 2009 (Cth), Clermont Coal Pty Ltd contravened section 340 of the Fair Work Act 2009 (Cth). 2. By its conduct on 14 November 2014 in dismissing Mr Alan Scott from his employment because he had engaged in 'industrial activity' as the President of the local lodge of the Construction, Forestry, Mining and Energy Union within the meaning of section 346(b) of the Fair Work Act 2009 (Cth), Clermont Coal Pty Ltd contravened section 346 of the Fair Work Act 2009 (Cth). 5 Clermont Coal's claim to have captured the gist of its contraventions appears to be based upon the High Court decision in Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53; [2003] HCA 75 where (at [89]) Gummow, Hayne and Heydon JJ were critical of declarations that spoke "merely of 'an arrangement' having a purpose and effect, without giving any content to that expression and without indicating the gist of the findings of the primary judge identifying the arrangement". 6 In Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148, Greenwood J considered the form a declaration should take in the context of proceedings under Parts IV and V of the Trade Practices Act 1974 (Cth). His Honour observed that such a declaration should capture the essence of the conduct in question, as follows (at [21]): It follows that if a declaration is to be made in exercise of the discretionary power, it must recite the rights of the parties with respect to the final resolution of the matter in controversy with precision rather than represent some form of shorthand summary of the outcome of the controversy such as reciting that a party contravened s 45(2)(a)(ii) of the Act or s 45(2)(b)(ii), or that a party did not contravene s 46 of the Act. In principle, the formulation of the declaration ought properly reflect the essence of the conduct constituting the declared state of affairs and not simply be framed in terms of the language of the section itself which begs the question of the conduct … In general terms, I consider these principles apply equally to proposed declarations in this matter relating to contraventions of the FWA. 7 Bearing in mind the above observations, I consider the set of proposed declarations submitted by Clermont Coal are too abridged and the set submitted by Mr Scott are too detailed. However, I consider the latter set form a more suitable foundation for declarations that identify the gist or essence of Clermont Coal's contravening conduct and also provide a suitable definition of the final resolution of this matter. Accordingly, I propose to make declarations in the following form:

1. The respondent contravened s 340 of the Fair Work Act 2009 (Cth) by its conduct on 14 November 2014 in dismissing the second applicant because he had exercised a number of workplace rights during the period from 2012 to 2014, namely as a bargaining representative, or as a representative of a bargaining representative, for the Clermont Coal Enterprise Agreement 2012 and for the Clermont Coal Enterprise Agreement 2013, and as a representative of choice of other employees under clause 4 Dispute Resolution of the Clermont Coal Enterprise Agreement 2012.
2. The respondent contravened s 346 of the Fair Work Act 2009 (Cth) by its conduct on 14 November 2014 in dismissing the second applicant because, at various times between 2012 and 2014, in his capacity variously as the President of the first applicant's Clermont Open Cut Lodge, as a member of the first applicant's Clermont Open Cut Lodge Committee, as a union delegate or other representative of the first applicant and, as a member of the first applicant, he engaged in industrial activity in that he represented or advanced the views, claims or interests of the first applicant and its members.

Reinstatement order 8 The description of this issue is misleading. In fact, Mr Scott was re-employed at Clermont Coal with effect from 6 October 2015. The issue therefore is not his reinstatement per se, but rather ensuring that he suffers no loss of income, allowances or entitlements as a result of the termination and, in particular, achieves substantially the same terms and conditions as he was receiving before his employment was terminated on 14 November 2014. This issue is complicated by the fact that, in the intervening period, the workforce at Clermont Coal was restructured. This restructuring was the object of the process that led to Mr Scott's termination as outlined in my liability judgment (see [2015] FCA 1014 at [29]-[30]). One consequence of this restructuring was that, shortly after Mr Scott was re-employed, he began to perform a new role at Clermont Coal and, in that new role, he received a higher shift allowance. 9 In essence, Mr Scott contends that, regardless of his re-employment, he is entitled to an order that he be reinstated to his former position and suffer no loss of income, allowances or entitlements as a consequence of his termination. He has proposed the following alternative forms of reinstatement order: (a) that the respondent shall reinstate Alan John Scott to the position of operator in the employment of the respondent; (b) with no loss and with continuity of service being maintained for all purposes; or in the alternative: (a) that the respondent shall reinstate Alan John Scott in his employment to the position of operator at the Clermont Open Cut Mine and treat as null and void its dismissal of him. (b) with no loss and with continuity of service being maintained for all purposes. 10 For its part, Clermont Coal contends that it is irrational to order reinstatement for Mr Scott when he has already been re-employed. It accepts he is entitled to be fully compensated for any loss he has suffered as a result of his dismissal. Accordingly, it has proposed orders in the following form: 1. For all purposes of his remuneration and other entitlements, the Respondent treat the Second Applicant as if he had been employed continuously by the Respondent in the period from 14 November 2014 up to and including the date of his reinstatement into employment with the Respondent with effect from 6 October 2015 (the Continuity Period). 2. Subject to Order 4, and compliance by the Second Applicant with Order 4, the Respondent must, in respect of the Continuity Period referred to in Order 1: (a) in accordance with Schedule 1 to these orders, calculate the gross amount that it would have been required to pay to the Second Applicant had he remained in his employment throughout the Continuity Period; (b) deduct from the gross amount calculated in accordance with subparagraph (a) the total (grossed up) amount paid to the Second Applicant during the Continuity Period pursuant to the interlocutory agreement reached between the parties on 15 December 2015; (c) pay to the Second Applicant within 30 days the gross amount calculated in accordance with subparagraph (b) above, less applicable tax. 3. The Respondent shall remit any applicable tax to the Australian Tax[ation] Office that is required to be remitted in order to reflect the payments made to the Second Applicant pursuant to Order 2. 4. The Second Applicant shall unconditionally direct Maurice Blackburn solicitors to repay to the Respondent the sum of $40,451.25 held in trust representing the repayment of the severance entitlements paid to him on his termination. 5. The Second Applicant shall unconditionally direct Maurice Blackburn solicitors to repay the sum of $16,359.06 held in trust representing the repayment of the net annual leave entitlements paid to him on his termination. 6. The Respondent is to amend the PAYG summary provided to the Second Applicant and the Australian Taxation Office to remove reference to the Second Applicant receiving redundancy entitlements. (Emphasis in original) 11 The schedule to be attached to these orders (see 2(a) above) was as follows: For the purpose of calculating the gross amount that the Respondent would have been required to pay to the Second Applicant in accordance with Order 2(a) …, the following components will be included: 1. A component in respect of superannuation, to be paid into the Second Applicant's nominated superannuation fund, in accordance with the Superannuation Guarantee and Clause 15 of the Clermont Coal Enterprise Agreement 2012; 2. A component in respect of the Mortgage Interest Subsidy that the Second Applicant would have been paid in respect of the interest component on his housing loan pursuant to Clause 6(a) of the Clermont Accommodation Human Resources Standard (the Standard), subject to the Second Applicant providing the loan documentation as at July 2015 to prove the interest amount as required by clause 6(c) of the Standard within 30 days of the date of the Orders. 3. A component in respect of the Site Performance Payment referred to in correspondence from the Respondent to the Second Applicant dated 24 September 2015. 4. A component in respect of the shift allowance that the Second Applicant would have otherwise received for working a 7 on 7 off day shift roster pattern, in accordance with Clause 18.2 of the Agreement. 5. From 1 March 2014 onwards, an increase in the base salary paid to employees of the Respondent pursuant to the Work Performance Review Process. The increase in the base salary paid to the Second Applicant will reflect the increase that the Second Applicant would have been entitled to if he achieved an overall rating of a 3 - Meets Expectations as an outcome of the 2014 end of year Work Performance Review process. 6. A component in respect of the Private Health Reimbursement that the Second Applicant would have been paid pursuant to Clause 3 of the Private Health Reimbursement Guideline (Guideline), subject to the Second Applicant providing to the Respondent with evidence of private health insurance and proof of payment as required by clause 4 of the Guideline. (Emphasis in original) 12 In my view, the course proposed by Clermont Coal is the most appropriate one in all the circumstances. That is so for three reasons. First, I do not consider I should make an order which defies the agreed facts and established history, namely that Mr Scott has in fact been re-employed at Clermont Coal. Secondly, and more importantly, if I were to make the orders sought by Mr Scott, that will, in my view, create a situation of continuing uncertainty while the parties negotiate the range of matters addressed in Clermont Coal's proposed orders. Given the failure of the parties to agree upon almost any aspect of this proceeding to date, it is likely, in my view, that they will not reach agreement on those matters and they will then seek to have the matter brought back before me to be resolved. Such an outcome would, in my view, be the antithesis of the finality required by s 22 of the Federal Court of Australia Act 1976 (Cth). Thirdly, I consider Clermont Coal's proposed orders propose a fair and practical approach to the resolution of all the matters bearing upon Mr Scott's loss of income, allowances and entitlements. 13 For these reasons, I propose to make the orders proposed by Clermont Coal.

Penalty 14 Section 546 of the FWA provides: (1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision. Note: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)). Determining amount of pecuniary penalty (2) The pecuniary penalty must not be more than: (a) if the person is an individual - the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or (b) if the person is a body corporate - 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2). Payment of penalty (3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to: (a) the Commonwealth; or (b) a particular organisation; or (c) a particular person. Recovery of penalty (4) The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable. No limitation on orders (5) To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545. 15 In my liability judgment, I found (at [214]) that Clermont Coal had contravened two provisions of the FWA: ss 340 and 346. Both of those provisions are civil remedy provisions (s 539(1)). 16 For a body corporate, the maximum penalty for a contravention of each of those provisions is 300 penalty units (ss 539 and 546(2)(b)). The parties agree that, at the relevant time, 300 penalty units equates to $51,000. 17 Both parties referred to the list of considerations identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14] as potentially relevant to the assessment of an appropriate pecuniary penalty in this matter. Those considerations have been applied in numerous single judge and Full Court decisions since. An example of the latter is Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357; [2008] FCAFC 170 at [57] per Branson and Lander JJ. Nonetheless, as Buchanan J pointed out in Australian Ophthalmic Suppliers Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8 at [91], this list of considerations should not be applied too rigidly because: 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. 18 The High Court reflected similar sentiments recently in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46 where French CJ, Kiefel, Bell, Nettle and Gordon JJ observed (at [55]) the distinction to be drawn between civil penalty provisions and penalties under the criminal law: No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance: "Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act." (Footnotes omitted) 19 Mr Scott pointed to a range of factors which he submitted should be taken into account in assessing the quantum of the penalty to be imposed on Clermont Coal. They included: (a) the need to deter repetition by Clermont Coal and others who might be tempted to commit similar contraventions of the FWA; (b) the lack of any contrition demonstrated by Clermont Coal; (c) to send a message to the management of corporations that they should not victimise trade union delegates carrying out legitimate industrial activities on behalf of their members; and (d) the fact that Clermont Coal is a large well-resourced corporation which was able to access high quality advice in implementing the restructuring process at the Clermont mine. 20 On the latter factor, it claimed that Clermont Coal's contraventions were therefore easily detectable by it and therefore preventable. 21 In Clermont Coal's favour, Mr Scott accepted that: (a) it had no history of contraventions of the FWA and should therefore be treated as a first time contravener; (b) the prohibited reasons were not the sole reasons for Clermont Coal's decision to terminate Mr Scott; and, (c) while the course of conduct provisions of the FWA do not apply to ss 340 and 346, the application of the totality principle is likely to result in the same outcome. 22 With respect to the last matter above, Mr Scott referred to the decision of Logan J in Construction, Forestry, Mining and Energy Union v North Goonyella Coal Mine Pty Ltd [2013] FCA 1444 (North Goonyella) at [62], where his Honour found that contraventions of ss 340 and 346 fell outside the provisions of s 557. I respectfully agree with his Honour's conclusion and will therefore treat Clermont Coal's contraventions of ss 340 and 346 separately. Nonetheless, I will take into account the totality principle in assessing the appropriate penalty for its contraventions. I therefore reject the submission of Clermont Coal that its contravention should be treated as a single course of conduct. 23 On the application of the totality principle, I will have regard to the observations of Katzmann J in Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 4) (2012) 225 IR 113; [2012] FCA 894 at [12]-[18], Collier J in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 5) [2013] FCA 1384 at [5]-[6] and Logan J in North Goonyella at [58]-[63]. 24 For its part, Clermont Coal submitted that: (a) the penalty to be imposed should be proportionate to the objective circumstances of its contravening; (b) its conduct was not found to be wilful or deliberate and so deterrence should be a less significant factor; (c) there was no material risk of it re-offending; and (d) its absence of contrition, which it appeared to accept, was not an aggravating factor and consequently there were no aggravating factors that affected the objective seriousness of its contraventions. 25 In its favour, apart from the matters identified by Mr Scott, which it adopted, it also submitted it should be given credit for continuing to pay him his wages after his dismissal and reinstating him soon after the liability judgment was delivered. 26 Finally, Clermont Coal submitted that Mr Scott's claim that its contraventions were easily detectable and preventable should be rejected. On this aspect, it submitted that regard should be had to the findings in the liability judgment that: Mr Fleming had been fully briefed by Ms Washington about his responsibilities; the selection process was not found to be inherently biased against employees who engaged in union activities; and Mr Fleming, but not Mr Christensen, had failed to make the difficult distinction between Mr Scott's general attitude and his conduct as a union delegate for the CFMEU. 27 In my view, an appropriate penalty for each of Clermont Coal's contraventions is $2,500, or a total penalty of $5,000. In assessing this penalty, I have had regard to each of the matters mentioned above and, in particular, to the following factors. First, I do not consider that, in the circumstances, the contraventions were easily detectable and preventable. The matters highlighted by Clermont Coal above have led me to this conclusion. Secondly, as to the relative seriousness of the contraventions, I consider they were towards the low end of the scale. There was no evidence that Mr Scott was targeted, that there was any wilful or deliberate conduct involved in the contraventions, or that they occurred as a result of some systemic failure. Instead, they arose out of the limited, but significant, role of one individual, Mr Fleming, in a system that could reasonably have been expected by Clermont Coal to identify the candidates for compulsory redundancy, without being affected by a prohibited reason under the FWA.

Payment to the CFMEU 28 The fourth and final issue is an application by the CFMEU, as the first applicant in this proceeding, that any pecuniary penalty to be imposed be paid to it under s 546(3) of the FWA. In Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4, the Full Court (at [117]) described such an order as the usual approach. Clermont Coal does not oppose such an order being made. Accordingly, I will make an order that this pecuniary penalty be paid to the first applicant, the CFMEU. 29 I will therefore make orders consistent with the above reasons. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.