Ponzio v Maxim Electrical Services

REASONS FOR JUDGMENT 1 There is before the Court an application for the imposition of penalties on the second respondent under s 187AD of the Workplace Relations Act 1996 (Cth) ("the Act"). The penalties are sought for contraventions of s 187AA of the Act said to have been constituted by the making of payments to some 27 employees in relation to a period on 5 August 2003, when each of those employees engaged in industrial action. 2 The applicant also seeks a declaration pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) that, by making each of the payments, the second respondent contravened s 187AA of the Act. The proceeding has been discontinued as against the first respondent. I shall therefore deal with the matter on the basis that any relief is to be granted only against the second respondent, Maxim Electrical Services (Vic) Pty Ltd ("Maxim"). 3 A statement of agreed facts has been filed. That statement discloses that each of the 27 employees of Maxim was employed at a site or sites at 173 and 183 City Road, Melbourne and 100 Cavanagh Street, Southbank. The agreed statement refers to those sites collectively as "the Three Towers site". The statement further recites that, on 1 August 2003, a Mr Andrew Schouten was killed when a crane near which he was working struck overhead powerlines on a farm at Shepparton. It is accepted that there was no connection between the work that was being performed at Shepparton and that being performed on the Three Towers site other than that the work was building and construction work. 4 Work proceeded as normal on the Three Towers site on 1 and 2 August 2003. There was no work carried out on that site on either Sunday, 3 August or Monday, 4 August 2003, the latter day being a rostered day off. Work was scheduled to resume at the Three Towers site on Tuesday, 5 August. The employees concerned attended for work at that site at approximately 7.00 am but work ceased at 7.30 am while a safety audit was conducted in accordance with a policy which had been adopted, apparently by the Building Industry Group ("BIG"), known as the "Onsite Fatalities Policy and Procedure". That policy recited, amongst other things; 'When the Victorian Construction Unions, VTHCBIG, have a confirmed death of a unionised construction worker arising out of an industrial accident on site, the following steps will be taken: (i) The immediate needs for the affected family will be the first priority. (ii) The site where the death occurs will immediately stop work and the other sites of the same principal contractor will also stop. (iii) Mass meetings on site will be called in the industry on the following day to hear a report on the incident. Then the following will occur: (a) all productive work will stop and a full, thorough safety audit will be conducted by all available safety committee members from the basement to the roof and any OHS problems immediately rectified. Clean-up works arising from the audit will be undertaken as per VBIA with areas progressively opened to production once listed items have been addressed; (b) in addition, the site meeting will take up an agreed minimum amount per worker to be collected by the relevant shop stewards. This will be donated immediately to the deceased worker's family via the appropriate union office, where a receipt will be issued and shall be displayed on site noticeboards; (c) any other actions required can be voted on at the site mass meeting; (d) industry-wide stop work action will occur with the mutual agreement of BIG secretaries taking into account the nature and circumstances of the incident leading to the death of the worker." 5 The employees of Maxim stopped work between 7.30 am and approximately 1.30 pm on 5 August 2003 while the safety audit was being conducted. During that period they remained on site sitting in a shed while the site safety committee conducted the safety audit. In respect of the period of the stoppage, Maxim made a total payment of $2,901.80 to the twenty-seven employees. 6 The agreed statement of facts recites that the fact of the stoppage of work by the 27 employees was recorded in the site foremen's site diaries. There were apparently, three foremen, presumably one at the site constituted by each tower but nothing turns on any differences in the actual record. It is clear from the agreed statement that a record was made and the contracts manager for Maxim, Mr Birkett, was informed of the stoppage. The fact of the stoppage was also reflected in the time sheets for each employee on each tower. 7 Maxim was aware at the time that payment of strike pay was unlawful and a breach of the Act. It did not then have a written policy concerning industrial action. A decision was taken by Mr Birkett that employees were to be paid for the period of the stoppage although it is accepted that it was the usual attitude of Maxim that employees should not be paid for periods during which they withdraw their labour from the site. However, the agreed statement goes on to recite that, if Mr Birkett were uncertain about entitlements of employees to be paid, he would refer the matter to senior management or seek legal advice. He approved the time sheets for payment in respect of 5 August because he did not believe that the action of the employees concerned constituted industrial action or a strike. He believed that the stoppage occurred because of an occupational health and safety issue. It is also accepted in the agreed statement that Maxim incurred no cost as a result of the stoppage on 5 August other than the payment of the wages for the period concerned. The works were completed on time and on budget. Maxim has incurred other costs, including legal costs in defending the proceeding. 8 Since August 2003, Maxim has taken further steps to ensure compliance with the Act by adopting an unwritten policy that there is to be no pay for stoppages and that stoppages are to be noted in site diaries and reviewed before payments are made. Furthermore, responsibility for making payments in respect of periods of stoppages has been transferred to Mr Minney, the Managing Director of Maxim, who has determined to make no decision to pay employees until fully apprised of all information concerning the facts and circumstances surrounding a stoppage and until Mr Birkett has received a report from Maxim's site supervisors. 9 No prior convictions have been alleged against Maxim. The orders which a Court may make in respect of a contravention of s 187AA of the Act have been identified in s 187AD(1) which, until 10 August 2004, provided: 'In respect of contraventions of section 187AA or 187AB, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders: (a) An order imposing on a person who contravened or is contravening that section a penalty of not more than $10,000; (b) if the person contravened or is contravening section 187AB an order requiring the person to pay to an employer compensation of such amount as the Court thinks appropriate; (c) injunctions, including interim injunctions, and any other orders that the Court considers necessary to stop the contravention or remedy its effects; (d) any other consequential orders.' 10 The conduct revealed by the agreed statement of facts is, I consider, at the lower end of the range of culpability for which s 187AD(1)(a) prescribed a maximum penalty of $10,000. The factors which can be instanced as mitigating Maxim's offence include that it has not prolonged this litigation by contesting the allegations of contravention but has co-operated in the provision of an agreed statement of facts. 11 In many respects the present case is similar to that of Ponzio v Firebase Sprinkler Systems Pty Limited [2005] FCA 733, where Merkel J observed, at [8]; It is clear that there was a lack of care or diligence on the part of the respondent that led it to making the payments that constituted the contraventions. However, I am not prepared to go so far as to say it made the payments recklessly or not caring whether the payments were a breach of the Act. It seems to me that having regard to all of the circumstances, and even accepting the distinguishing feature between the present case and Seelite [Pine v Seelite Windows & Doors Pty Ltd[2005] FCA 500], the factors that led Finkelstein J in Seelite not to impose a penalty are applicable here. 12 In the present case the inadvertence was not like that. As in another case before me, which arose out of the same factual circumstances, Pine v Austress Freyssinet (Vic) Pty Ltd [2005] FCA 583, the inadvertence or mistake here was not as to the fact that a stoppage had occurred but rather as to the legal effect of a stoppage of which the controlling officers of Maxim were clearly aware. 13 I regard the liability imposed by this Act as being strict in the sense that a lack of awareness that a particular stoppage of work amounted to industrial action as defined does not constitute a defence. In the circumstances, I consider it appropriate to give effect to the principle of totality by imposing a total penalty of $900, which I shall order should be paid into consolidated revenue. I regard this penalty as within the range which is indicated by a number of cases arising, as I said, in relation to Pine v Austress Freyssinet (supra), out of the same circumstances which commenced with the death of Mr Schouten on 1 August 2003. Those cases include those to which I have referred of Pine v Seelite Windows & Doors Pty Ltd [2005] FCA 500 and Firebase (supra) and also Ponzio v BVM Builders Pty Ltd [2005] FCA 238 (146 IR 375), Clarke v Baulderstone Hornibrook Pty Ltd [2003] FCA 1426 and MX Constructions Pty Limited v ADCO Constructions Pty Limited [2004] FCA 193. 14 I was referred in this context by Mr O'Grady of Counsel for the applicant, to another decision of Merkel J of Pine v Multiplex Constructions (Vic) Pty Ltd [2005] FCA 1428 where his Honour imposed a total penalty of $4,000. In that case his Honour considered there were several features which distinguished it from the line of authority to which I have just referred. His Honour continued at [8]: 'They are 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 10 contraventions. It is common ground that any penalties should be paid into the consolidated revenue fund.' 15 The agreed statement of facts does not permit me to draw an inference with confidence about the size of Maxim, but I have proceeded on the basis that it is not in any sense as large as Multiplex and does not have the readiness of access to legal advice which Merkel J imputed to that company. I have also taken into account that, before the admitted contravention in respect of 5 August 2003, Maxim had not adopted a practice of paying employees who stopped work during safety audits. 16 I see no useful purpose as likely to be served in making the declaration which has been sought by the applicant in the present case. Accordingly, the orders of the Court are: (1) That a penalty of $900 is imposed on the second respondent in respect of its contraventions of s 187AA of the Workplace Relations Act 1996 (Cth) on 5th August 2003. (2) That such penalty be paid into the consolidated revenue fund. (3) That the penalty be paid within 21 days to the District Registrar of the Court in Melbourne.