Metropolitan Fire and Emergency Services Board v United Firefighters' Union of Australia

Federal Court of Australia|2000-12-21|Before: Ryan J

REASONS FOR ORDERS AS TO PENALTY 1 In reasons for judgment published on 17 May 2005 (Metropolitan Fire and Emergency Services Board v United Firefighters' Union of Australia [2005] FCA 621), I concluded that there was, as the evidence stood on 9 May 2005, sufficient to establish a contravention by each of the respondents of an order ("the Order"), made by Commissioner Foggo in the Australian Industrial Relations Commission ("the Commission") on 20 April 2005. The present reasons should be read in conjunction with those earlier reasons. 2 The Order was made pursuant to s 127 of the Workplace Relations Act 1996 (Cth) ("the Act"), the relevant provisions of which are set out at [30] of the earlier reasons. 3 The Order was expressed to be binding on, amongst others, the first respondent ("the UFU") and officials, delegates, employees and agents of the UFU one of whom is the second respondent ("Marshall") who has at all relevant times been the Victorian State Secretary and the General Secretary of the UFU. After granting an injunction pursuant to s 127(6) of the Act on 18 May 2005, I directed the parties to file and serve written contentions addressing the question of penalty. These reasons consider the question of what, if any, penalty should be imposed pursuant to s 178 of the Act on either or both the UFU and Marshall for the contravention of the Order which I have already found has been committed. Section 178 provides, so far as is relevant; '(1) Where an organisation or person bound by an award, an order of the Commission (whether under this Act, the Registration and Accountability of Organisations Schedule or otherwise) or a certified agreement breaches a term of the award, order or agreement, a penalty may be imposed by the Court or by a court of competent jurisdiction.

(b) the breaches arose out of a course of conduct by the organisation or person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.

(4) The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award, order or agreement is:

(i) if the breach is taken to have been committed under a provision included in an award or order under paragraph 111(1)(e) - 150 penalty units for a body corporate or 30 penalty units in other cases; and

(iia) if the breach is of a term of a certified agreement and continues for more than one day - the total of:

(A) 300 penalty units for a body corporate or 60 penalty units in other cases; and

(B) 150 penalty units for a body corporate, or 30 penalty units in other cases, for each day for which the breach continues; and

(iib) if the breach is of a term of a certified agreement but subparagraph (iia) does not apply - 300 penalty units for a body corporate or 60 penalty units in other cases; and

(ii) in any other case - 300 penalty units for a body corporate or 60 penalty units in other cases; and

(b) where the penalty is not imposed by the Court - 300 penalty units for a body corporate or 60 penalty units in other cases.

(5) A penalty for a breach of a term of an award or order may be sued for and recovered by:

(i) whose employment is, or at the time of the breach was, subject to the award; and

(d) an organisation that is affected, or any of whose members are affected, by the breach; or

(e) an officer or employee of an organisation that is affected, or any of whose members are affected, by the breach where the officer or employee is authorised, under the rules of the organisation, to sue on behalf of the organisation.'

Is a contravention of an order under s 127 amenable to the imposition of a penalty under s 178? 4 It was submitted on behalf of the UFU and Marshall that the Act does not confer power on this Court to impose a pecuniary penalty pursuant to s 178 for a contravention of an order like the present Order made by the Commission under s 127. That was said to flow from the fact that s 127 operates as a "code" in relation to the enforcement of orders made under it so that all that this Court can do by way of enforcing the Commission's Order is to grant an injunction under s 127(6) or s 127(7). By way of contrast, Counsel for the UFU and Marshall pointed to Div 10 of Pt VIB of the Act which was introduced at the same time as s 127 and which contains a discrete "code" for enforcement of the "penalty provisions" identified in s 170ND. Thus, s 170NF provides for the imposition of a monetary penalty up to the limits stipulated in s 170NF(2) for contravention of a "penalty provision" while s 170NG empowers an eligible court to grant an injunction requiring a person not to contravene, or to cease contravening, a "penalty provision." 5 A similar argument by analogy was erected on the presence in the Act of Pt VID which was said to contain a similar "code" conferring power to grant injunctions and impose monetary penalties in relation to contraventions of the provisions of that Part governing Australian Workplace Agreements. 6 Counsel for the UFU and Marshall also sought to derive support for this contention from s 170JC of the Act which provides remedies, including injunctive relief, in relation to terminations of employment. It was noted that, in addition to an injunction, an employee in whose favour an order has been made may seek a penalty pursuant to s 178 for contravention of the order. That was said to flow from the express provision in s 170JC(1) that Pt VIII (which contains s 178) "has the same effect in relation to orders under [Pt VIA] as it does in relation to awards." The implication in this part of the respondent's argument seems to be that, if the legislature had intended pecuniary penalties to be available for contraventions of orders made under s 127, it would have made that intention clear by the use of an express formula like that in s 170JC extending the application of Pt VIII to orders under s 127. 7 I am not persuaded that the reach of s 178 of the Act is limited in the way for which Counsel for the respondents have contended. Section 127 finds its place in Pt VI of the Act which governs the powers and functions of the Commission in relation to the making and varying of "enforceable awards established and maintained by the Commission"; s 88A. Division 3 of Pt VI specifies "particular powers" of the Commission including that conferred by s 111(1)(b) to "make an award or order, including one by consent of the parties, in relation to all or any of the matters in dispute, including; (i) a provisional award or order; or (ii) an interim award or order." 8 The specific power conferred on the Commission by s 127 is exercisable; 'if it appears to the Commission that industrial action is happening, or is threatened, impending or probable in relation to;

(b) the negotiation or proposed negotiation of an agreement under Division 2 of Pt VIB; or

9 The power conferred on the Commission is to "by order, give directions that the industrial action stop or not occur." Division 6 of Pt VI of the Act which regulates awards of the Commission contains s 143, subss (1) and (1A) of which provide; '(1) Where the Commission makes a decision or determination that, in the Commission's opinion, is an award or an order affecting an award, the Commission shall promptly:

(a) reduce the decision or determination to writing that:

(ii) is signed by at least one member of the Commission; and

(ii) a list specifying each party who appeared at the hearing of the proceeding concerned.

(1A) For the purposes of subsection (1), none of the following is an award or an order affecting an award:

(a) a decision to certify an agreement under Part VIB;

10 "Award" is defined in s 4(1) of the Act as meaning "an award or order that has been reduced to writing under subsection 143(1) but does not include an order made by the Commission in a proceeding under Subdivision B of Division 3 of Part VIA". The expression "order" is not defined in the Act but it seems clear that an order of the kind contemplated by s 127 attracts the application of s 143(2) which provides; '(2) Where the Commission makes a decision or determination:

(a) that, in the Commission's opinion, is not an award; but

(b) in relation to which one or more of these subparagraphs applies:

(i) the decision or determination is a decision or determination from which an appeal may be made to a Full Bench;

(ii) the decision or determination is, in the Commission's opinion, otherwise so significant that it should be made available in writing;

(iii) in the case of a decision - it is a decision to certify an agreement under Part VIB;

(iv) the decision or determination is, in the Commission's opinion, an order affecting a certified agreement;

(i) is signed by at least one member of the Commission; and

(ia) in the case of a decision to certify an agreement under Part VIB - a copy of the agreement; and

(ii) a list specifying each party who appeared at the hearing of the proceeding concerned.'

11 On the face of the legislative provisions reviewed above, there is nothing which warrants reading down the expression "order of the Commission" in s 178(1) to exclude an order under s 127. Nor have I been able to discern in the history of the legislation any support for the implied limitation for which Counsel for the respondents contended. There was no need for an express or exhaustive code for enforcement of orders under s 127 to be included within the four corners of that section because the order of the Commission for which the section provides is not marked out as different from any other award or order which the Commission is empowered to make by Pt VI of the Act. By contrast, Pt VIB dealing with certified agreements, contemplates only that the Commission may "certify" an agreement made by the parties to the agreement. The only power conferred by Pt VIB on the Commission to make an award or order seems to be that stipulated in s 170MX which arises after the Commission has, under s 170MW, terminated or suspended a bargaining period. Hence, s 143(1A) and s 143(2) accord special treatment to decisions under Pt VIB in a way which marks them out from awards, orders affecting an award or other orders governed by Pt VII. A similar distinction can be drawn between Pt VI and Pt VID governing Australian Workplace Agreements. 12 The need for an express application of Pt VIII, including s 178, to enforcement of orders made under Pt VIA, to which Counsel for the respondents drew attention when referring to s 170JC(1) of the Act, only arises because an order under Pt VIA is clearly not an order or award under Pt VI. It is an order by the Commission "under this Part" (ie Pt VIA); see eg, ss 170JA, 170JB, 170JC and 170JD. Accordingly, in the absence of a code for enforcement in Pt VIA itself, express incorporation by reference of the enforcement provisions in Pt VIII was necessary, or at least, out of an abundance of caution, desirable. 13 In this exercise in statutory construction, I have not derived assistance from Josephson v Walker (1914) 18 CLR 691 at 701, Construction, Forestry, Mining and Energy Union v Gordonstone Coal Management Pty Ltd (1997) 78 FCR 437 at 441 or Byrne v Australian Airlines (1995) 185 CLR 410 at 425-6 to which I have been referred by Counsel for the respondents in support of the proposition that "prima facie, where the same statute creates a new right and specifies the remedy, that remedy is exclusive." 14 In Josephson v Walker, the Industrial Arbitration Act 1912 (NSW) created a right to recover underpayments of wages prescribed by an award and it was held that it was only enforceable in the manner stipulated in that Act which was by application to an industrial or other magistrate with a right of appeal to the Court of Industrial Arbitration, so that no action lay to recover the amount in the Supreme Court. In CFMEU v Gordonstone Coal, Burchett J held that s 178 of the Act contained an exhaustive prescription of the remedies available for breach of an award, including a certified agreement or order of the Commission, so that an injunction was not available in this Court to restrain a breach of a certified agreement. If anything, it may have been recognition of that effect of s 178 which prompted the express inclusion in s 127(6) of a power to grant an injunction restraining contravention of an order made under s 127(1). At all events, the case is not authority for giving a restricted effect to s 178. 15 Similarly, in Byrne v Australian Airlines, it was held that ss 178 and 179 of the Act operated to preclude enforcement of private rights by a common law action in damages for breach of an award. However, the case does not suggest that the provision in another part of the Act of a different mode of enforcement cuts down the amplitude of the pecuniary remedies available under ss 178 and 179 according to their terms. 16 For these reasons, I consider that this Court may, independently of the grant of an injunction, impose, pursuant to s 178, a penalty for contravention of an order made by the Commission under s 127. I am reinforced in that conclusion because an order of that kind was made by Beaumont J in BHP Steel (AIS) Pty Limited v Construction, Forestry, Mining and Energy Union [2000] FCA 1908 (21 December 2000) although it seems that the point discussed above was not argued in that case.

The exercise of the discretion to impose penalties 17 It is accepted on both sides that if, as I have held, the Court has power in a case like the present to impose penalties under s 178, the power is discretionary both as to its exercise and as to the amount of the penalty to be imposed. Some guidance is afforded by the enumeration by Branson J in Construction, Forestry, Mining and Energy Union v Coal & Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 of the matters to be considered in imposing a penalty under s 298U for a breach of the freedom of association provisions of the Act. I had regard to those considerations in a similar context in Australian Nursing Federation v Alcheringa Hostel Inc (2004) 136 FCR 530. When such of those matters as are applicable directly or by analogy to a contravention of an order of the Commission under s 127 are examined, the following salient features emerge from the present case: (i) the conduct was engaged in by the UFU and Marshall when they were under no misapprehension about what the Order commanded, although it was arguable that it had been made without power. (ii) there is no evidence that either respondent has previously contravened an order under s 127. (iii) the contravening acts arose out of a single course of conduct. (iv) the consequences of the conduct found to be in contravention of the Order have not been contended by Counsel for the applicant to have been "serious" or to have "caused particular damage to the applicant." On the other hand, the bans and their continuation were said to have been not trivial. (v) there is a need to deter participants in the system of industrial relations administered under the Act from flouting or disregarding orders of the Commission especially where those orders have been made after a full hearing of both sides and have been tailored to meet the exigencies of a particular industrial dispute. 18 Branson J acknowledged that the list of considerations which she enumerated in CFMEU v Coal & Allied (supra) was not intended to be exhaustive. I have therefore had regard, in addition to the matters outlined above, to the following further matters which the present case seems to make relevant to the discretion which I am required to exercise: (a) Although as I have noted at (i) at [17] above that the UFU apparently regarded the Order as arguably invalid, there is no evidence of any legal advice on which that belief was based. Nor is any inference available from the institution of proceedings in the High Court as to the strength of the argument which the UFU's legal adviser considered to be available, assuming such advice to have been obtained. In that respect, the present case can be assimilated to Victoria University of Technology v Australian Education Union (1999) 91 IR 96. In that case a Full Court of this Court declined to disturb the imposition under s 178 of penalties of $200 and $50 and noted, at 107, that the relevant circumstances "included the fact that the application was not brought or treated as a test case and that no evidence was adduced by [the respondent employer] to establish that its calculations of [the employee's] entitlements had been based on legal advice or otherwise reflected a bona fide view of the correct interpretation of the relevant provisions of the Award. (b) Section 178 of the Act was amended with effect from 10 August 2004 to increase the maximum penalties to 300 penalty units for a body corporate or 60 penalty units in other cases. That represents an increase in monetary terms of $23,000 and $4,600 respectively. I accept that those increases reflect a concern by the legislature that the range of penalties at the upper end of the scale should be expanded to enable the Court in appropriate cases to signify condign disapproval of conduct in contravention of the Act or awards or orders made under it. However, as the cases reveal, the circumstances in which the imposition of a penalty has been considered appropriate are almost infinitely various. In the absence of a legislative prescription of a minimum penalty, the discretion therefore remains exercisable by fixing an amount, in an appropriate case, which is only a minuscule proportion of the increased maximum now prescribed by the section. The discretion would miscarry if the Court were to fix an amount which it would have considered appropriate under the regime before 10 August 2004 and multiply it to reflect the increase in the maximum penalties which came into effect on that date. (c) An appeal to a Full Bench of the Commission was lodged on 11 May 2005 but no application was made for a stay of the Order under s 127 pending the hearing and determination of that appeal. That omission is mitigated to some extent by the fact that Commissioner Foggo's reasons for making the Order of 20 April 2005 were not published until 9 May 2005 which was almost at the end of the 21 days allowed by r 11(2) of the Commissioner's Rules for the institution of an appeal. However, as I read those Rules, it would have been open to the respondents to seek a stay of the Order at least until the Commissioner's reasons were published and they were able to prepare a notice of appeal in final form. (d) The fact that the respondents co-operated with the applicant and the Court in having the application for an interlocutory injunction listed as the speedy trial of the action tells, to some extent, in their favour. (e) I have also been mindful of the fact that the respondents succeeded in demonstrating, on the hearing in this Court, that one of the five changes identified in the decision of Commissioner Simmonds (that related to the Occupational Support Group) was not properly capable of supporting a prohibition of the kind framed in the Order. (f) I have been urged on behalf of the applicant to treat the issue by the respondents of the bulletin of 20 April 2005 and of the further bulletin of 26 April as two separate contraventions of the Order, each attracting the imposition of a separate penalty under s 178. However, I consider that the sending of the two bulletins arose out of a course of conduct by the respondents within the meaning of s 178(2) of the Act so that it should be taken to constitute a single breach of prohibition on the continuation of the ban proscribed by cl 4(a) of the Order. It is true that such continuation of the ban also involved advising or procuring members of the UFU employed by the applicant to continue the ban on the implementation of the proposed changes. However, because those employees were themselves directly subject to the prohibition in cl 4(a) of the Order, I do not consider that it was intended that one and the same person could, by the same conduct, contravene both cl 4(a) and cl 4(d). On the other hand, the fact that the course of conduct constituted by the publication of the two bulletins occurred over six days, with ample time for reflection and obtaining advice between each act constituting the course of conduct, should be reflected in the amount of penalty for what I consider should be taken to be a single breach.

Conclusion 19 In the light of all the considerations canvassed in the second section of these reasons, I consider it appropriate to impose a penalty of $2,500 on the UFU and a penalty of $500 on Marshall. 20 It was contended on behalf of the respondents that the UFU was directly, and not vicariously, liable for the actions of Marshall who was its directing mind; see Hamilton v Whitehead (1988) 166 CLR 121 at 127. It was therefore said not to be open to the Court to impose a penalty on Marshall as well as on the UFU itself. However, Hamilton v Whitehead was directed to a provision of the Companies Code of Western Australia which imposed a liability directly on the company and did not contain a provision attaching accessorial liability to a director like that contained in s 233(1) of the Income Tax Assessment Act discussed in Mallan v Lee (1949) 80 CLR 198. In the present case, the Order was expressed by cl 3 to be binding not only on the UFU but, by par (c), on "officials, delegates, employees and agents of the UFU." The introductory words of cl 4 of the Order directed that "every person and organisation listed in paragraphs (b) to (d) of clause 3 above must not" engage in any of the conduct proscribed by subcll (a), (b), (c) or (d) of cl 4. It was that prohibition, separately directed to Marshall as an official of the UFU, which he has contravened, thereby exposing him to liability to a penalty under s 178. In that sense, the prohibition in cl 4 of the Order is analogous to that in s 170NC of the Act which French J held in Wesfarmers Premier Coal Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No 2) (2004) 138 IR 362 to be capable of making the union officials identified by his Honour at 391 personally liable to a penalty for contravention of the section. 21 Because he has signally failed to negative the inference that it was principally his decision to publish each of the bulletins of 20 April and 26 April 2005 and to continue, in the face of the Order, the ban on implementing any of the approved changes, I have considered it appropriate to impose a penalty on Marshall personally in the sum of $500 indicated at [19] above. 22 I shall order pursuant to s 356 that the penalties which I propose to impose should be paid to the applicant. As an appeal has already been instituted against my order of 18 May 2005, I shall grant a stay of execution for recovery of the penalties until the hearing and determination of the appeal or further order. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Order as to Penalty herein of the Honourable Justice Ryan.

Associate: Dated: 5 September 2005 Counsel for the Applicant: Mr F Parry SC with Mr P Wheelahan

Solicitor for the Applicant: Freehills

Counsel for the Respondents: Mr H Borenstein SC with Mr P Rozen

Solicitor for the Respondents: Slater & Gordon

Date of Hearing: 9 May 2005

Date of Judgment: 17 May 2005

Written submissions as to penalty filed: 15 June, 1 July and 13 July 2005

Date of Reasons for Orders as to Penalty: 5 September 2005

Workplace Relations Act 1996(Cth)ss 4(1), 88A, 127, 143, 170JA, 170JB, 170JC, 170JD, 170ND, 170NF, 170NG, 178

Walker, the Industrial Arbitration Act 1912(NSW)

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