National Tertiary Education Industry Union v Swinburne University of Technology [2013] FCA 1128 | Case summary

REASONS FOR JUDGMENT 1 In May 2012 the Victorian State Government determined to make substantial changes to the funding model for vocational education and training. The respondent University provided such services. As a result of the changes it faced the prospect of substantial reductions to its funding for its vocational education and training courses. 2 Shortly afterwards the council of the University decided to stop offering some courses at its Lilydale Campus and to relocate one of its faculties from one campus to another. These decisions had implications for the ongoing employment and job security of employees of the University. 3 The applicant Union commenced this proceeding because it considered that the University had made the relevant decisions without first complying with certain requirements of an enterprise agreement, to which it and the University were party. That agreement was the Swinburne University of Technology, Academic and General Staff Agreement 2009 ("the Agreement"). It had been made pursuant to the Fair Work Act 2009 (Cth) ("the Act"). 4 Clause 53 of the Agreement imposed obligations on the University to consult staff and the Union when significant organisational restructuring was in contemplation. Relevantly, Clause 53 provided: "53. MANAGEMENT OF CHANGE - ORGANISATIONAL RESTRUCTURING Where the University is considering changes in programs, organisational practice, structure or technology that are likely to have significant effects on employees the University shall discuss these changes with staff and the Union. The changes will also be discussed with the JCC to ensure that broad consultation over the management of change, occurs. When an affected staff member chooses the University will discuss these changes with their nominated representative. The University will consider all input as part of the process of forming an intention to adopt any such change. For the purposes of this clause consultation means the exchange of information about a matter or issue, explanation of the respective points of view, and taking into account the views of the other. Consultation does not necessarily mean that an agreement can be reached. If agreement cannot be reached the University will provide reasons in writing to the affected staff. 53.1 Significant effects may include but not are limited to: - Changes to work practices - … - … - Organisational changes which impact on job opportunities, or job security - Change in the composition, operation or size of the workforce - … - The need for retraining or transfer of employees to other work locations - … 53.2 Where major changes to workplace arrangements are proposed, and before the University makes a decision about implementation, the University will: 53.2.1 Involve affected staff and the Union in consultation and discussion regarding any major change that is likely to have an impact on the work and conditions of staff. 53.2.2 Explore options regarding any major organisational change with affected staff and the Union to achieve the best possible solution. 53.2.3 Provide in writing to the affected staff, the Union and the JCC, all relevant information about the changes including the nature of the changes proposed; the expected effects of the changes on staff members, timeframe for the proposed changes to take place and any other matters likely to affect staff members. 53.2.4 Take into account and consider the views of staff and the Union who will be affected by the change when formulating the final change proposal." 5 Following mediation the University accepted that it had, in a number of respects, failed to comply with its obligations under the Agreement. The Union, for its part, accepted these admissions and did not seek to pursue any additional allegations of contravention. An agreed statement of facts, a copy of which is appended to these reasons, was prepared and filed. 6 The University acknowledged that the preconditions for the operation of Clause 53.2 of the Agreement had been satisfied. Specifically, it agreed that the changes which had been proposed and which were adopted by the University council were: "major changes" to workplace arrangements of the kind comprehended by Clause 53.2 of the Agreement; changes which were likely to have an impact on the work and conditions of staff within the meaning of Clause 53.2.1; and involved "major organisational change" within the meaning of Clause 53.2.2. 7 The University admitted that it had failed, prior to making its decision, to: involve the Union and affected staff in consultation and discussion regarding either of the proposals; explore options with the Union or affected staff regarding either of the proposals; provide in writing to the Union, affected staff, or the Joint Consultative Committee relevant information about either of the proposals; and take into account the views of the Union or affected staff in respect of either of the proposals. 8 As a result, it accepted that it had contravened Clauses 53.2.1, 53.2.2, 53.2.3 and 53.2.4 of the Agreement. 9 The University agreed to take a number of ameliorative steps in relation to these contraventions. They are to: make an announcement, in agreed terms, to all staff apologising for the contraventions; pay an amount of $15,000 to the Union to cover its legal costs and disbursements in relation to the proceeding; and donate a total of $40,000 to charitable organisations nominated by the Union. 10 The apology was made, in the agreed terms, in an e-mail which was circulated to staff on 11 October 2013. 11 The donations to the charitable organisations were made on or about 24 October 2013. 12 The payment to the Union to cover legal costs is yet to be made. 13 The only outstanding issue between the parties was the amount of any pecuniary penalty which might be imposed under the Act in respect of the contraventions. The Union contended that any penalty imposed by the Court should fall within the range of $0 to $5,000. The University agreed that a penalty in this range would be appropriate. 14 The parties were agreed, and I accept, that the contraventions of the Agreement had arisen from a single course of conduct and that, as a result, the University should be treated as having committed a single contravention of s 50 of the Act: cf Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at 426-7. 15 Section 50 of the Act provides that a person must not contravene a term of an enterprise agreement if, as s 51 provides, that agreement applies to the person. By s 546 the Court is empowered to order that a person pay a pecuniary penalty "that the court considers is appropriate." At relevant times ss 539 and 546(2) of the Act provided that the maximum pecuniary penalty which the Court could impose on the University for a contravention of s 50 was $33,000. Until 28 December 2012 a "penalty unit" was valued at $110: see s 12 of the Act; s 4AA of the Crimes Act 1914 (Cth) as applicable prior to the commencement of the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth). 16 The principles which guide the exercise of the Court's discretion when fixing a pecuniary penalty are well established: see Australian Ophthalmic Suppliers Pty Ltd v McAlary-Smith (2008) 165 FCR 560; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373 at [3]-[17]. 17 Of particular importance, in a case such as the present, is the principle that the Court is not bound to accept and impose a particular penalty proposed by one or more of the parties or agreed to by them. In Wotherspoon v Construction, Forestry, Mining and Energy Union [2010] FCA 111 at [8] and [27] Jessup J said that: "[8] The authorities make it clear that, notwithstanding the agreement of the parties to a particular proceeding, the determination of the correct penalty is a matter for the court. The court is not obliged to accept the parties' agreement; nor is it entitled to take the easy course of doing so without deliberation. However, the authorities also show that, where the parties have agreed on a penalty, the court should give weight to that agreement, and should generally give effect to it so long as the agreed penalty falls within the appropriate range, that is, so long as it may be described as neither manifestly inadequate nor manifestly excessive. See NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 291 and 298; Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51]; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, 553 [57] and 564 565 [129]. On any view, it will be necessary for the court in a case such as the present to acquaint itself with the facts of, and surrounding, the admitted contraventions and to derive from those facts an understanding of the extent and nature of the conduct of the respondents, and of the gravity of that conduct generally. … … [27] The touchstone by reference to which to approach the question whether the penalties agreed in the present case are either manifestly inadequate or manifestly excessive is that the penalties should pay "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.": Australian Ophthalmic Supplies Pty Ltd v McAlary Smith (2008) 165 FCR 560, 580 [91]: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417, 428. Although it is not the function of the court to substitute its own preferred penalties for those agreed by the parties, it is necessary for the court to come at least to a general view about the seriousness of the conduct involved in the admitted contraventions of s 38 of the BCII Act. …" 18 In Kelly v Fitzpatrick (2007) 166 IR 14 at [14] I identified a range of considerations which had the potential to be relevant when the Court was called on to fix a monetary penalty. These considerations have been referred to in a number of subsequent decisions. It is not necessary to restate them. Subject to the important caveat that the list should not become "a rigid catalogue of matters for attention" (McAlary-Smith at 580), I regard most of these considerations, with varying degrees of weight, to be of assistance in determining the appropriate penalty to be imposed on the University. 19 When examining the material on the Court file in advance of the hearing I was concerned that there may not have been sufficient information before the Court to enable an assessment to be made of the circumstances in which the contraventions occurred. At minimum, as Jessup J held in Wotherspoon, the Court must be able "to come at least to a general view about the seriousness of the conduct involved." It may be that more is required. In Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 at [8] Gordon J said that, in cases such as the present, "the Court, in the exercise of its judicial power, must satisfy itself that it has sufficient facts and matters to enable it to assess and impose an appropriate penalty. … If the Court forms the view that it does not have sufficient facts and matters, it can and should request the parties to provide additional evidence or information …" Her Honour based these propositions on the recent decision of the Victorian Court of Appeal in Australian Securities and Investments Commission v Ingleby [2013] VSCA 49 at [33] and the decision of a Full Court of this Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [79]. 20 As will become apparent shortly there were a number of material deficiencies in the evidence available to the Court. That evidence was to be found exclusively in the agreed statement of facts. Despite these deficiencies, for reasons which will become apparent, I have formed the view that I had sufficient facts before me so as to enable me to assess and impose a penalty in the exercise of my statutory discretion. 21 This case bears some unusual features. The ameliorative steps taken by the University have involved the expenditure of substantial sums of money. They were taken voluntarily and it is unlikely that the Court would (and, perhaps, could) have ordered that donations be made to charitable organisations. The Union, no doubt mindful of this, has been prepared to contemplate the imposition of a very low penalty or no penalty at all. 22 Apart from some passages in the agreed statement of facts there was no evidence before the Court which explained how the contraventions came to have occurred. It appears that, once the Government funding announcement was made, the University's administrators quickly appreciated that it would have an adverse impact on the University's capacity to continue to offer certain courses. They quickly set about developing proposals to deal with the problem and the Vice Chancellor took those proposals to the council. Council adopted them. The council's decision was then communicated to the Union and the staff. What remains unexplained is why it was that the University administrators failed to comply with the provisions of Clause 53 of the Agreement. A number of possibilities exist. A conscious and deliberate decision may have been made to ignore the requirements. Those responsible may have taken the view, wrongly, that the circumstances were such that the clause was not engaged. A more benign possibility is that, in their haste to respond to the change to funding arrangements, the administrators simply overlooked the provisions of Clause 53 to which the University had agreed. 23 In the absence of any evidence to support a finding of deliberate contravention by the University, I will proceed on the basis that the contravention arose through inadvertence. As I said in the course or argument, in another case this may not be an appropriate course. The present circumstance and, particularly, the voluntary payment of $40,000 by the University, however, set this case apart. 24 The evidence does not disclose the number of University staff who were affected prejudicially by the council's decision. Nor is there any evidence before the Court which suggests that the adverse impact of the decisions might have been mitigated had the consultation, for which Clause 53 provides, taken place. 25 The University is a creature of statute. It is incorporated under the Swinburne University of Technology Act 2010 (Vic). It may be inferred that it is dependent, to a large extent, on Government funding to enable it to operate. The evidence does not, however, allow me to know the extent of that dependence, nor does it disclose the number of employees of the University whose terms and conditions of employment are regulated by the Agreement. It may, however, be inferred that the reduction in Government funding, in the order of $35 million per annum, made it inevitable that the University would have to make significant reductions to its expenditure. The decisions of the council were a response to this imperative. 26 The University has clearly demonstrated contrition for its contravention of the Agreement. It had not previously been found by a Court to have contravened the Agreement or any workplace laws enacted by the Commonwealth Parliament. 27 Deterrence, both specific and general, are important considerations when pecuniary penalties for contraventions of industrial instruments are being fixed. 28 I do not consider that a need for specific deterrence looms large as a factor in fixing a pecuniary penalty in the present circumstances. The University has no history of non-compliance with industrial instruments which bind it. Its contravention was inadvertent and was readily acknowledged. It has exhibited its contrition in a meaningful way. The contravention is unlikely to be repeated. 29 On the other hand general deterrence does require that a penalty be fixed at a level which is sufficient to mark the Court's disapproval of the offending conduct and to act as a meaningful warning to others not to act (or fail to act) in a similar manner. 30 Were it not for the substantial charitable donations made by the University I would have regarded the penalty range proposed by the parties as being manifestly inadequate. The donations total $40,000. This sum exceeds the maximum pecuniary penalty available to the Court. It also exceeds, by an even greater margin, the penalty which would have been warranted in the absence of the donations. That penalty would have been in the range of $10,000-15,000. 31 Given that the University has already paid significantly more than the Court would have been minded to impose by way of a pecuniary penalty, I do not consider it appropriate to impose such a penalty. 32 There will be declarations substantially in the terms of paragraphs 2, 3, 4 and 5 of the originating application. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

National Tertiary Education Industry Union v Swinburne University of Technology

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