Consideration
14Section 357 of the Act provides for a civil penalty to be imposed for the breach of an industrial instrument. That section is in the following terms:
357 Civil penalty for breach of industrial instruments
(1) If an industrial court is satisfied that a person has contravened a provision of an industrial instrument, it may order the person to pay a pecuniary penalty not exceeding $10,000 (a civil penalty).
Note. Section 21 of the Interpretation Act 1987 provides that the expression "contravene" in an Act includes a failure to comply.
(2) Proceedings for a civil penalty may be instituted:
(a) by an inspector or any other person authorised by this Act to institute proceedings for offences, or
(b) by an employer bound by the industrial instrument concerned, or
(c) by an industrial organisation concerned in the industry to which the proceedings relate.
(3) Proceedings for a civil penalty may be instituted within 6 years after the contravention.
(4) To avoid doubt, the rules of evidence apply to proceedings for a civil penalty.
(5) Evidence given in proceedings for the recovery of money under Part 2 is not admissible in proceedings for a civil penalty.
(6) In any proceedings for a civil penalty, the industrial court may award costs to either party and assess the amount of those costs. Costs cannot be awarded against the prosecutor except in the circumstances in which costs can be awarded against the prosecutor in criminal proceedings.
(7) The following provisions apply to contraventions of industrial instruments and to proceedings for a civil penalty for such a contravention in the same way as they apply to criminal proceedings for an offence against this Act:
(a) Sections 400-403.
(b) The provisions of any Act relating to the recovery of penalties imposed for an offence.
(c) Any provision of this or any other Act relating to criminal proceedings that is applied to this section by the regulations (whether with or without modification).
15As the defendant submitted, the Industrial Court has previously considered principles relevant to the determination of penalty (and whether any penalty should be imposed) in the case of breaches of industrial instruments, most recently in Auscare Corporation Pty Ltd v New South Wales Department of Commerce [2007] NSWIRComm 271 ('Auscare (No 1)') and in Auscare Corporation Pty Ltd v New South Wales Department of Commerce (No 2) [2008] NSWIRComm 124 ('Auscare (No 2)').
16The majority in Auscare (No 1) made the following relevant observations, at [12] - [16]:
[12] Principles applicable to the imposition of civil penalties in the case of prosecutions for breaches of awards (see s 357 of the Act) were recently considered by the Full Bench of the Court in Yarramul Pty Limited t/as La Porchetta Mulwala and Mulwala Golden Inn Restaurant Pty Limited v Office of Industrial Relations [2007] NSWIRComm 230. These principles bear upon the questions raised in this matter.
[13] The relevant principles enunciated by the Full Bench were as follows:
[19] We agree that breaches of industrial instruments are serious matters and, in that respect, we concur with the view expressed by Marks J in Transport Workers' Union v Carey's Warehousing & Distribution Pty Limited and others [2006] NSWIRComm 192 at [15] as follows:
[15] The starting point for the assessment of an appropriate penalty is a consideration of the objective seriousness of the offences with which the defendants are charged. The prosecutor submitted, and I accept, that the failure to comply with the provisions of an industrial instrument is a serious matter. Industrial instruments are designed to provide for minimum rates of pay and working conditions for employees. They are established through mechanisms created by government and are intended to have, and do have, the force of law in terms of their application and the enforcement of duties and obligations imposed by them.
[16] ...The underpayment of any wages will always be a serious matter, particularly from the perspective of an employee.
[20] We would add, however, that the seriousness attaching to breaches of industrial instruments also relates to the important public purpose such instruments serve by the creation of an orderly system of employment regulation, including the establishment, by force of law, of minimum entitlements for employees (as assessed by the Industrial Relations Commission of New South Wales). We also observe in relation to the above matters, his Honour found that not only were the obligations in the relevant award clear and unambiguous, but there was 'evidence of a systematic refusal to pay overtime, for time worked on Saturdays at the rate provided for in the Award, being double time and annual leave loadings.'
[21] There is no evidence in the matters before us that there was any systematic refusal to pay the employees concerned in any relevant respect. Without more than passing consideration to the distinction between the Club Award and the Restaurants Award, for the purposes of these proceedings we accept that the reliance on the Restaurants Award was done in good faith (although we note that this observation does not detract from the requirement for strict adherence to the terms of such instruments).
[22] Marks J also considered breaches of industrial instruments in Transport Workers' Union of New South Wales v Contract Courier Services Pty Ltd [2007] NSWIRComm 152 and in particular at [20] when he said, in words that we would endorse:
[20] I commence by observing that industrial instruments serve an important and integral part in the orderly regulation of relationships between employers and employees and principals and independent contractors. They have the force of law and sanctions are imposed for breach. ...
[23] In endorsing his Honour's observations as to the importance of, and integral part, industrial instruments play in the relationship between employers and employees, we would also observe, in relation to the matters before us, there is no evidence, as was the case before his Honour, that 'the conduct of the defendant cannot be characterised as something that was unintended'. As earlier indicated, the breaches of the industrial instruments arising under s 357 of the Act arose as a result of an honest belief as to the relevant award applying.
[24] Overall, in relation to the breaches arising under s 357 of the Act, we are of the view that, given the facts and circumstances, they are at the lower end of the scale of objective seriousness.
[14] The Full Bench imposed penalties of $6,000 and $3,500 respectively for the breaches of the award in that matter.
[15] As a matter of general principle, a court will be disinclined to impose no penalty where breaches of the Act or industrial instruments have been found. Whilst made in the context of proceedings brought before the Federal Court of Australia seeking a declaration that there had been a breach of the Workplace Relations Act 1996 (as to right of entry provision, which depended for its operation, upon a declaration as to the operation of a particular award) and the imposition of a penalty, we consider the following observations of Wilcox J in Community Public Sector Union & Anor v Stellar Call Centres Pty Ltd (1999) 92 IR 224 at [57] to be apposite in the present context:
Upon proof of a breach of the Act it is ordinarily appropriate to impose a penalty, even if only a nominal one, in order to mark the Court's disapproval of the breach.
[16] That principle will apply with even greater force in the present case. Given the principles stated in Yarramul and the significant public interest in ensuring compliance with awards, it appears to us that it will be only exceptional cases which would attract no penalty where breaches of an award are proven.
17In Auscare (No 2) I referred to a number of other authorities that had dealt with the principles to be applied in imposing a civil penalty. At [8] - [14], the Court observed as follows:
[8] A corollary of these observations is that the imposition of a penalty under s 357 of the Act must recognise the need for deterrence, both personal and general. This is not to incorporate into the factors to be taken into account in assessing a civil penalty the principles of sentencing in the criminal law (although I leave this question open), but rather to recognise that civil penalties serve a role in enhancing social welfare by minimising the net social cost of wrongdoing and to fix a price on the contravention that is sufficient to deter repetition by the contravenor: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) and Others (2007) 161 FCR 513 at [60]. In the context of the system of awards maintained under the Act, deterrence not only serves the function of ensuring that the terms of awards are complied with, but maintains the integrity of the industrial system itself which depends, in large measure, upon such instruments.
[9] Deterrence has been recognised as a feature of the fixing of civil penalties by a Full Bench of this Commission in an analogous area (the contravention of dispute orders made under s 139 of the Act): Bluescope Steel Ltd (formerly BHP Steel Ltd) v Australian Workers' Union, New South Wales Branch (No 2) (2005) 141 IR 329 at [4] and in relevantly analogous proceeding under the Workplace Relations Act 1996 in decisions of the Federal Court of Australia: Commonwealth Bank of Australia and Another v Finance Sector Union of Australia (2007) 157 FCR 329 at [181] (and the authorities referred to therein) and Ponzio v B & P Caelli Constructions Pty Ltd and Others (2007) 158 FCR 543 at [93]. The extent to which deterrence may feature in any penalty will, in the case of personal deterrence, depend on an assessment being made as to the risk of re-offending and, in the case of general deterrence, an assessment being made as to the extent to which the penalty will act to a deterrent to others in the community who might be likely to offend.
[10] These considerations do not detract from what Schmidt J referred to in her draft judgment as the need, in assessing an appropriate penalty, to have regard to the nature and quality of the offence. In ACCC v Dataline.Net.Au Pty Ltd, the Full Bench of the Federal Court observed (at [60]), in the context of an appeal in proceedings concerning the imposition of a pecuniary penalty for a contravention of the Trade Practices Act 1974 that "the character of the contravention must be the central determination of the penalty taking into account any ameliorating circumstances". That principle is applicable to penalty proceedings under s 357 of the Act.
[11] Without derogating from the width of these general principles, a consideration of the authorities (in a variety of legislative contexts) concerning civil penalties offers some guidance as some particular matters that may be taken into account in determining whether proscribed conduct calls for the imposition of a penalty, and if it does, the amount of penalty.
[12] In Bluescope Steel (AIS) Ltd v Australian Workers' Union and Anor (No 2) [2005] NSWIRComm 210 at [36] and [37], Boland J adopted the factors identified by Branson J in Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 (the same factors were adopted by Branson J in Commonwealth Bank at [181]) to distill the following factors as being appropriate to take account of in proceedings for a civil penalty under s 139 of the Act (at [37]):
(a) The circumstances in which the relevant contravention took place (including whether the contravention was undertaken in deliberate defiance or disregard of the dispute order);
(b) Whether the person found to have been in contravention of a dispute order has previously been found to have engaged in conduct in contravention of an earlier dispute order (in this respect see s 139(4)(b), which provides for higher maximum penalties where there has been an earlier contravention);
(c) The consequences of the conduct found to be in contravention of the dispute order;
(d) The need, in the circumstances, for deterrence;
(e) Any relevant subjective factors including undertakings regarding future conduct.
[13] In relation to mitigating factors, I note that Jessup J in Ponzio considered the following factors to be "conventional" in assessing a civil penalty (in that matter his Honour was considering an appeal from a judgment in which applications for orders under s 187 AD of the Workplace Relations Act 1996 has been dismissed) (at [138]):
the first respondent co-operated with the appellant;
the first respondent had not been involved in any prior contravention of relevant provisions of the Act;
the first respondent had reviewed its strike pay procedure, and was aware that claims for lost time for health and safety reasons had to be scrutinised carefully;
the payments in the present case were made under significant pressure from the other respondents;
since August 2003, the first respondent had resisted making payments in contravention of s 187AA of the Act (on four separate occasions to which his Honour referred);
the fact and conduct of the legal proceeding itself had been costly to the first respondent.
[14] The first to third and sixth factors (with modification for the present context) are applicable to the present proceedings for a civil penalty.
18I should also refer to the judgment of Peterson J in Ian Robertson v Marrickville City Council [2003] NSWIRComm 394. In that case the defendant was charged with 10 individual offences under s 357 to which it pleaded guilty. Peterson J observed, at [32], that the breaches arose out of a single course of conduct. His Honour stated as follows, at [33]:
Section 357 does not provide that multiple breaches may be treated as a single breach, where they arise out of a course of conduct. However, if one were to apply the totality principle applicable in criminal proceedings, a course submitted by the parties to be applicable here, then a result not too far removed from a single breach approach would be achieved. I will apply totality.
19In my opinion, having regard to the foregoing authorities and the particular factual circumstances of these proceedings, the relevant considerations in fixing a penalty are as follows:
(1)Breaches of industrial instruments are serious matters;
(2)A court will be disinclined to impose no penalty where breaches of the Act or industrial instruments have been found. Only exceptional cases that would attract no penalty where breaches of an award were proven;
(3)The starting point for the assessment of an appropriate penalty is a consideration of the objective seriousness of the offence with which the defendant is charged. This includes a consideration of whether the breach was deliberate or the result of recklessness or indifference in applying the Award;
(4)The imposition of a penalty under s 357 of the Act must recognise the need for deterrence, both personal and general;
(5)Whether the defendant had been involved in any prior contravention of s 357 of the Act;
(6)The consequences of the conduct found to be in breach of the industrial instrument;
(7)Steps taken by the defendant to avoid a repeat of the breach;
(8)Contrition and remorse including whether the defendant made reparation for any loss caused by the breach;
(9)If the breach was admitted or the prosecution was put to proof;
(10)Any other relevant subjective factors including undertakings regarding future conduct;
(11)The maximum penalty; and
(12)Whether multiple breaches should be treated as arising out of a single course of conduct.