Lisette Pine v Expoconti Pty Ltd

REASONS FOR JUDGMENT 1 The applicant applied for the imposition of a penalty under s 187AD(1)(a) under the Workplace Relations Act 1996 (Cth) ("the Act") on the basis of admitted contraventions of s 187AA of the Act. The contraventions have occurred because the respondent paid wages to its employees in respect of periods during which those employees were engaged in industrial action. 2 Subsection 187AA(1) provides that an employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action if: "(a) the employer or employee was or is a member of an organisation during that period; or (b) the employer was or is a constitutional corporation bound by an award, a certified agreement or an AWA during that period; or (c) the industrial action was taken, or is being taken, in connection with work regulated by an award, a certified agreement or an AWA; …". Subsection 187AA(3) provides that a contravention of subs (1) is not an offence. 3 At the time of contraventions in this case, s 187AD provided that, in respect of a contravention of s 187AA, the Court may, if the Court considers it is appropriate in all the circumstances of the case, make one or more of certain orders, including an order imposing on a person who contravened the section a penalty of not more than $10,000. 4 According to the amended statement of claim filed in the proceeding, the applicant is an inspector appointed under s 84 of the Act and is entitled to bring the proceeding pursuant to s 187AC(2)(c) of the Act and reg 32B of the Workplace Relations Regulations 1996 (Cth). The statement of claim alleges that the respondent is a "constitutional corporation" for the purposes of s 4, and an "employer" for the purposes of s 187AA of the Act. There is no dispute about these matters. 5 After the applicant filed an amended application and amended statement of claim, the parties sought leave to file a statement of agreed facts. 6 Amongst other things, the statement of agreed facts stated that: · The respondent is a partitioning and plastering company and performs work for builders as a subcontractor. · On 5 and 6 August 2003, the respondent was a body corporate bound by a certified agreement, namely the Expoconti Pty Ltd and CFMEU Building and Construction Industry Collective Bargaining Agreement 2002-2005 ("the Certified Agreement"). · On 1 August 2003, Mr Andrew Schouten, a labourer, was killed when the crane he was working near struck overhead power lines on a farm in Shepparton. There was no connection between the work being performed on the Shepparton farm and the work being performed by the respondent some days later at the Concept Blue Apartments project at 336 Russell Street in Melbourne ("the Concept Blue site") and the Bio 21 project at the University of Melbourne ("the Bio 21 site"), other than that the respondent's work could be said to be "building and construction" work. Work continued as normal on the Concept Blue site and the Bio 21 site on that day; and no work was carried out on the following Monday, which was a rostered day off. Concept Blue Site · On 5 and 6 August 2003, the respondent was engaged by Multiplex Limited ("Multiplex") to undertake fit out works at the Concept Blue site. · On these days, the respondent had 15 employees on the Concept Blue site so as to carry out fit out works ("the Concept Blue employees"). · On Tuesday, 5 August 2003 work commenced as normal but stopped at 8:30 am when the Construction Forestry Mining and Energy Union ("CFMEU") conducted a site safety audit pursuant to the CFMEU On Site Fatalities Policy and Procedure ("CFMEU Policy"). The safety audit continued throughout the day and Concept Blue employees (except for Adrian Osbourne) sat in the site sheds until 3.00 pm waiting for work to recommence. They did not perform any further work on this day. Adrian Osbourne failed or refused to perform any work on the Concept Blue site for a period of about 2 ˝ hours between the time he stopped work and the time he left the site ("the Tuesday period"). · The CFMEU's Policy is a published policy regarding procedures to be undertaken following a death in the industry of an unionised construction worker from an industrial accident. · At about 7:00 am on Wednesday, 6 August 2003, the Concept Blue employees went to the site sheds as they arrived at the Concept Blue site. At about 7:30 am a mass meeting was held on the Concept Blue site in relation to the dispute over payment for the previous day. At about 8:00 am Adrian Osbourne left the Concept Blue site. At about 8:30 am a meeting was held between Multiplex and the CFMEU. At about 10:00 am a mass meeting was held and the Concept Blue employees (except for Adrian Osbourne) agreed to return to work based on a resolution between Multiplex and the unions over payment. · On 6 August 2003 the employees (except for Adrian Osbourne) failed or refused to perform any work on the Concept Blue site between the time they were rostered to commence work and about 10:00 am. Adrian Osbourne failed or refused to perform any work on the Concept Blue site for a period of about 1 hour between the time he was rostered to commence work and the time he left the site ("the Wednesday period"). · The respondent made a total payment of about $2,582.49 (not including allowances) to the Concept Blue employees for a 5 ˝ hour period in relation to the Tuesday period (except for Adrian Osbourne who was paid for a 2 ˝ hour period) and for a 3 hour period in relation to the Wednesday period (except for Adrian Osbourne who was paid for a 1 hour period). Payment for 2 ˝ hours for 5 August 2003 was made on 7 August 2003, and payment for 5 ˝ hours for 5 August 2003 (except for Adrian Osbourne) and payment for 6 August 2003 to the Concept Blue employees was made on 14 August 2003. · The cost of the stoppages to the respondent, which included on-site and off-site overheads was approximately $7,500. The works were completed substantially on time and within budget. University of Melbourne Bio 21 Project · On 5 August 2003, the respondent was engaged by Baulderstone Hornibrook to undertake fit out works at the Bio 21 site. · On this day, the respondent had 13 employees on the Bio 21 site in order to carry out fit out works ("the Bio 21 employees"). · On Tuesday, 5 August 2003 work commenced as normal but stopped at 9.30 am when the CFMEU conducted a site safety audit pursuant to the CFMEU Policy. The safety audit was conducted from 9.30 am to 1.00 pm and the Bio 21 employees sat in the site sheds throughout that period waiting for work to recommence. The Bio 21 employees returned to normal duties from 1.00 pm to 3.00 pm after the safety walk was completed. The only exception was Ivan Vrselja. He left the site at 12.00 noon and the respondent has paid him 4.5 hours for the day instead of 8 hours. ("the BIO 21 Tuesday period") · There were no safety issues on Wednesday 6 August 2003 and work duties were carried out as normal. · The respondent made a total payment of about $894.38 (not including allowances) to the Bio 21 employees for a 3 ˝ hour period in relation to the period that its employees were sitting in the site sheds on Tuesday 5 August 2003. Payment for 5 August 2003 was made on 7 August 2003. · The cost of the stoppages to the respondent, which included on-site and off-site overheads was approximately $2,500. The respondent's works were not completed on time and within budget. However, this disruption did not have any real impact upon the completion time and budget. Reasons for payment · The respondent's Director, Mr Nick Lee, was aware that its employees at both the Concept Blue site and the Bio 21 site were sitting on the site sheds waiting to return to work at the relevant times on 5 and 6 August 2003 and understood that the site including the alimaks and lifts had been shut down so as to allow a safety audit to be conducted by the Safety Committee pursuant to the CFMEU's Policy. He was not aware of the dispute over payment. · In the following week, Mr Lee made a decision to pay the respondent's employees at both the Concept Blue site and the Bio 21 site as he formed the view that the employees were sitting in the site sheds ready and willing to return to work but were prevented from doing so because the site (including the alimaks and lifts) had been closed because of the safety audit. Although Mr Lee did not investigate the specific nature of the safety issues, he believed that there was a genuine safety audit that prevented his employees from working. · Mr Lee was not aware of the specific requirements of the Act that only allow an employee to take action if the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety. Consequently, he did not know that he was contravening the Act. · There was no other work that the employees could carry out at the time. · The respondent claims that it did not pay any of its employees on other sites who stopped work and left those sites on 5 August 2003. In those cases the respondent claims that no safety audit was conducted on those sites. 7 Various factors can be considered in determining an appropriate penalty: see, e.g. CPSU v Telstra Corporation Ltd (2001) 108 IR 228 at 230-231 per Finkelstein J; CFMEU v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 at 232 per Branson J; and Pine v Multiplex Constructions (Vic) Pty Ltd [2005] FCA 1428 at [6] per Merkel J. They include the respondent's contravening conduct and the circumstances in which it took place; whether the contravention was inadvertent or otherwise; any previous finding that the respondent had contravened the Act in some material respect; whether a number of contraventions are distinct or arise out of essentially the one course of conduct; the level of the respondent's co-operation with the applicant in relation to the proceeding; and deterrence, both general and specific. 8 In their agreed statement of facts, the parties referred to the following mitigating factors: · The respondent has changed its policy to ensure that it does not make payments in the future in the event of industrial action by putting specific procedures into place. These procedures include a policy of not making any payments until a full and complete investigation has been carried out, including obtaining written instructions from the relevant builder, safety committee or union representative concerning any claimed entitlement to payment as a consequence of an employee being unable to work because of a reasonable concern about the imminent risk to his or her health or safety. · The respondent has no prior contraventions of Part VIII of the Act. · The applicant noted (1) the respondent's change of policy; (2) the respondent's lack of opposition to the Application at the earliest available opportunity; and (3) the fact that the respondent voluntarily agreed to include the Bio 21 matter into this proceeding as mitigating factors to be taken into account in imposing an appropriate penalty. I accept that these considerations militate in the respondent's favour. 9 There is a real question whether any penalty should be imposed in this case. The applicant submits that a penalty is appropriate and referred to the legislative history and purpose of the statutory scheme, as well as the recent decision of Merkel J in Multiplex. No penalty was imposed, however, in Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500, Ponzio v Firebase Sprinkler Systems Pty Ltd [2005] FCA 733 ("Firebase") and Ponzio v D and E Air Conditioning Pty Ltd [2005] FCA 964 ("D and E Air Conditioning"). Those cases are like this case in that they all involved an application for a penalty for contravention of s 187AA following an employer paying wages to its employees in respect of periods in August 2003 when those employees engaged in industrial action as defined in the Act on building and construction sites following Mr Schouten's death in Shepparton. The respondent submits that no penalty is appropriate in this case. 10 Although Finkelstein J did not impose a penalty in Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 ("Seelite") there were differences between that case and this. For instance, in Seelite, the amount of wages was also insignificant and the contravention involved only four workers at one site. 11 In Firebase, Merkel J referred to Seelite and, after noting that unlike Seelite the Firebase management was aware that the payments were made for the cessation of work, also decided not impose any penalty. In Firebase, the matters in mitigation included the absence of harm as a result of the stoppages, the development of a new policy, the respondent's apparent view that the industrial action related to health and safety issues and the respondent's conduct in the litigation. 12 In D and E Air Conditioning,North J also failed to impose a penalty. In that case, a total of 34 employees at four different sites stopped work, although the employer had subsequently introduced a new policy to avoid repetition of this conduct. North J laid particular emphasis on the unlikelihood of the respondent re-offending (at [28]). As to the question of general deterrence, his Honour laid some store by the fact that the respondent had incurred legal costs of around $8,000 to $10,000 and additional costs on the building project. He considered that the incidents should all be taken together because they arose out of the same circumstances ([29]). In concluding, North J said (at [29]-[31]): "If a penalty were to be appropriate then something in the region of about $1000 might be appropriate. But would that act as a general deterrent to employers? If they contravened the section they would incur the burden of legal costs far in excess of that sum in defending an application such as this. Given the nature of the breaches, the record of the respondent, its subsequent conduct and the amount of disadvantage already suffered, I do not regard the imposition of a penalty as serving the purpose of either particular deterrence or general deterrence. Considering all the matters put to me, the appropriate order in this case is for the Court [to] make the declaration sought but otherwise to impose no penalty." 13 I too have previously considered a penalty in relation to industrial action subsequent to Mr Schouten's death. In Ponzio v BVM Builders Pty Ltd [2005] FCA 238, I considered a penalty of $200 appropriate where a subcontractor at the Concept Blue site inadvertently paid two workers an amount of $405.85, although they failed to work on 5 and 6 August 2003. There were a variety of mitigating circumstances. In Pine v Austress Freyssinet (Vic) Pty Ltd [2005] FCA 583, Ryan J imposed a penalty of $800 in respect of contraventions of s 187AA on 5 and 6 August 2003, which also arose out of the same or similar circumstances, although involving more employees. 14 Most recently, in Multiplex, Merkel J imposed a penalty of $4,000 in respect of contraventions of s 187AA of the Act in relation to periods of industrial action on 5 and 6 August 2003. The matters that weighed most heavily against Multiplex were an admission by it that its practice was to pay employees who were on strike in the circumstances that arose in the case, notwithstanding that it either was aware, or ought to have been aware, that it was unlawful to pay striking employees. Merkel J commented that the case was not one of inadvertent or careless payment that might justify the Court declining to impose a penalty (at [7]). His Honour went on to note (at [8]) that: "Multiplex was the head contractor; it is a large corporation with ready access to legal advice concerning its obligations under the Act; it had adopted a practice of paying employees who stopped work during safety audits; and it either was aware, or ought to have been aware, that its practice was unlawful. As a result of those additional circumstances, which I regard as significant, it is appropriate to impose a total penalty of $4000 in respect of the ten contraventions. It is common ground that any penalty should be paid into the Consolidated Revenue Fund." 15 The present case involves payments to 28 employees at two sites in respect of periods of industrial action over two days by a subcontractor. The payments totalled a little less than $3,500. At the time they were made, the respondent believed there was a safety issue preventing its employees from working. It believed that its employees were ready and willing to work but that the alimaks and lifts had been shut down because of a safety audit, thereby preventing them from working. There was an absence of harm as a result of the stoppages. The respondent has no prior contraventions of Pt VIII of the Act and has since changed its policy to prevent a recurrence of this conduct. The respondent has admitted the contraventions at the earliest opportunity and co-operated with the applicant in dealing with the matter efficiently. There appears little likelihood that the respondent will repeat the contravening conduct. Further, the respondent has plainly incurred significant costs in defending these proceedings; and the applicant accepted that they were not insignificant. 16 I accept that this is not an appropriate case for particular weight to be given to the matter of general deterrence; and, in any event, this interest has been served by the bringing of this proceeding and the time and cost that the respondent has as a consequence been required to spend in relation to the proceeding, although I note the comments of Merkel J in Multiplex at [9]. I do not consider that this case is materially different from Firebase or D and E Air Conditioning; and, in this particular case, which arises out of the same factual background, interests of parity should prevail. I note too that the contraventions arise out of essentially the same course of conduct. Accordingly, although I regard the course as suited only to the exceptional case, I would make declarations concerning the respondent's contravening conduct but not impose a penalty in this case.